Quincy Corp., about to be liquidated, has the following amounts for its assets and liabilities: The mortgage is secured by the land and building, and the note payable is secured by the equipment. Quincy expects that the expenses of administering the liquidation will total $40,000. How much should Quincy expect to pay on the accounts payable?

Question

Quincy Corp., about to be liquidated, has the following amounts for its assets and liabilities:  The mortgage is secured by the land and building, and the note payable is secured by the equipment. Quincy expects that the expenses of administering the liquidation will total $40,000. How much should Quincy expect to pay on the accounts payable?

Quizplus · Accepted Answer

Quincy should expect to pay $96,000 on accounts payable. This is calculated by taking the percentage of unsecured claims (40%) and multiplying it by the total amount of accounts payable ($240,000). This approach assumes that all creditors will receive an equal percentage payment on their unsecured claims.