A company that was to be liquidated had the following liabilities: $$\begin{array} { | l | r | c | }
\hline \text { Income Taxes } & \$ 10,000 & \
\hline \text { Notes Payable secured by land } & 100,000 & \
\hline \text { Accounts Payable } & 50,000 & \
\hline \text { Salaries Payable } ( \$ 12,000 \text { from Employee \#1 } & & \
\hline \text { and } \$ 2,000 \text { for Employee } \# 2 ) & 14,000 & \
\hline \text { Administrative expenses for liquidation } & 20,000 & \
\hline & & \
\hline \text { The company had the following assets: } & \text { Book Value } & \text { Fair Value } \
\hline \text { Current Assets } & \$ 100,000 & 95,000 \
\hline \text { Land } & 50,000 & 75,000 \
\hline \text { Building } & 150,000 & 200,000 \
\hline
\end{array}$$
-Total assets, available to pay liabilities with priority and unsecured creditors, are calculated to be what amount?

Question

A company that was to be liquidated had the following liabilities: $$\begin{array} { | l | r | c | } 
\hline \text { Income Taxes } & \$ 10,000 & \
\hline \text { Notes Payable secured by land } & 100,000 & \
\hline \text { Accounts Payable } & 50,000 & \
\hline \text { Salaries Payable } ( \$ 12,000 \text { from Employee \#1 } & & \
\hline \text { and } \$ 2,000 \text { for Employee } \# 2 ) & 14,000 & \
\hline \text { Administrative expenses for liquidation } & 20,000 & \
\hline & & \
\hline \text { The company had the following assets: } & \text { Book Value } & \text { Fair Value } \
\hline \text { Current Assets } & \$ 100,000 & 95,000 \
\hline \text { Land } & 50,000 & 75,000 \
\hline \text { Building } & 150,000 & 200,000 \
\hline
\end{array}$$
-Total assets, available to pay liabilities with priority and unsecured creditors, are calculated to be what amount?

Quizplus · Accepted Answer

The total assets available are the fair value of the current assets ($95,000), land ($75,000), and building ($200,000), totaling $370,000. However, the notes payable secured by land ($100,000) must be deducted, leaving $270,000 available for other liabilities.

A Company That Was to Be Liquidated Had the Following