Sunshine Products is being liquidated.The real estate has been sold and there is a remaining mortgage balance of $126,000 after applying the sale proceeds.The other assets were just auctioned off and netted $418,000 after liquidation costs,wages,and taxes.The remaining secured creditors submitted claims totaling $362,000 and the unsecured creditor claims are $211,000.The secured creditors will receive ________ per $1 claim and the unsecured creditors will receive ________ per $1 claim.

Question

Quizplus · Accepted Answer

Total amount available for distribution to creditors = $418,000 (net funds from auction) + $126,000 (remaining mortgage balance) = $544,000
Total amount of creditor claims = $362,000 (secured) + $211,000 (unsecured) = $573,000
Secured creditors will receive $362,000/$362,000 = $1.00 per $1 claim.
Unsecured creditors will receive $182,000/($211,000 - $182,000) = $182,000/$29,000 = $6.2759 per $1 claim. Since the amount available for them is only $0.5 per $1 claim, they will receive only $0.5 per $1 claim. 
Therefore, the answer is (C) $1; $.1662.

Sunshine Products Is Being Liquidated