Olds Company declares Chapter 7 bankruptcy. The following are the asset and liability book values at that time. Administrative expenses are estimated to be $12,000: Cash $ 24,000 Accounts receivable 60,000 (worth $28,000) Inventory 70,000 (worth $56,000) Land (secures note A) 200,000 (worth $160,000) Building (secures bonds) 400,000 (worth $320,000) Equipment 120,000 (worth unknown) Accounts payable 180,000 Taxes payable to government 20,000 Note payable A 170,000 Note payable B 250,000 Bonds payable 300,000 The holders of note payable B want to collect at least $125,000. To achieve this goal, how much does the company have to receive in the liquidation of its equipment?

$128,000

Explanation:

The computation of liquidation of its equipment is shown below:-

Land                                 $160,000

Less: Notes payable        $170,000

Unsecured creditors balance                0

Building                             $320,000

Less: Bonds payable        $300,000

Total                                                      $20,000

Assets free

Cash                                                       $24,000

Accounts receivable                              $28,000

Inventory                                                 $56,000

Less: Liabilities with priority                   $32,000

($12,000 + $20,000)

Unsecured creditors available               $96,000

So, total unsecured liabilities

Accounts payable            $180,000

Note payable A                  $10,000

($170,000 - $160,000)

Note payable B                 $258,000

Total unsecured liabilities  $448,000

Collection of company for notes payable B = collection of note payable B - Unsecured creditors available

= $125,000 - $96,000

= $29,000

By taking total unsecured liabilities, then it has to be collect

= ($448,000 × 50%) - $96,000

= $128,000

b. a single paragraph.

a paragraph is a series of sentences that are organized and make sense, and are all related to a single topic . almost every piece of writing you do that is longer than a few sentences should be organized into paragraphs. this is because paragraphs show a reader where the subdivisions of an essay begin and end, and thus the reader see the organization of the essay into subjects in order to be able to understand its main points.