Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 35

Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act.Its creditors are considering an attempt to force liquidation.The company currently holds cash of $6,000 and accounts receivable of $25,000.In addition, the company owns four plots of land.The first two (labeled A and B) cost $8,000 each.Plots C and D cost the company $20,000 and $25,000, respectively.A mortgage lien is attached to each parcel of land as security for four different notes payable of $15,000 each.Presently, the land can be sold for the following: Another $25,000 note payable is unsecured.Accounts payable at this time total $32,000.Of this amount, $12,000 is salary owed to the company's workers.No employee is due more than $3,400.
The company expects to collect $12,000 from the accounts receivable if liquidation becomes necessary.Administrative expenses required for liquidation are anticipated to be $16,000.
a.Prepare a statement of financial affairs for Oregon Corporation.
b.If the company is liquidated, how much cash would be paid on the note payable secured by plot B
c.If the company is liquidated, how much cash would be paid on the unsecured note payable
d.If the company is liquidated and plot D is sold for $30,000, how much cash would be paid on the note payable secured by plot B