Business, 05.05.2020 04:43 rebekah2503

A company enters Chapter 7 bankruptcy proceedings. Its balance sheet, prepared using GAAP for a company with continuing operations, is as follows:

Cash $ 15,000
Accounts payable $ 90,000
Inventories 100,000
Loans payable 300,000
Plant and equipment, net 250,000
Equity (deficit) (25,000)
Total $365,000
Total $365,000

The plant and equipment is security for one of the loans, with a balance of $130,000. The other liabilities are unsecured. The following transactions occur:

* Inventories with a book value of $60,000 were sold for $40,000.
* The plant and equipment was sold for $200,000. The loan secured by the plant and equipment was paid.
* Wages and administrative expenses of $10,000 were accrued.
* An initial payment of 40 cents per dollar of indebtedness was paid to the unsecured creditors.

3. The statement of realization and liquidation reports total "assets not realized" of:

A. $ 40,000
B. $ 60,000
C. $ 61,000
D. $150,000

Answers: 3

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A company enters Chapter 7 bankruptcy proceedings. Its balance sheet, prepared using GAAP for a comp...