A company has the following balance sheet:
$$\begin{array} { | l | r | l | r | }
\hline \text { Inventory } & \$ 60,000 & \text { Accounts payable } & \$ 75,000 \
\hline \text { Equipment, net } & 150,000 & \text { Loan payable } & 180,000 \
\hline & & \text { Shareholders' equity } & ( 45,000 ) \
\hline \text { Total } & \$ 210,000 & \text { Total } & \$ 210,000 \
\hline
\end{array}$$ The inventory has a realizable value of $50,000, and the equipment has a realizable value of $140,000. The equipment secures the loan payable and the accounts payable are unsecured. The estimated deficiency to unsecured creditors is:

Question

A company has the following balance sheet:
$$\begin{array} { | l | r | l | r | } 
\hline \text { Inventory } & \$ 60,000 & \text { Accounts payable } & \$ 75,000 \
\hline \text { Equipment, net } & 150,000 & \text { Loan payable } & 180,000 \
\hline & & \text { Shareholders' equity } & ( 45,000 ) \
\hline \text { Total } & \$ 210,000 & \text { Total } & \$ 210,000 \
\hline
\end{array}$$ The inventory has a realizable value of $50,000, and the equipment has a realizable value of $140,000. The equipment secures the loan payable and the accounts payable are unsecured. The estimated deficiency to unsecured creditors is:

Quizplus · Accepted Answer

The estimated deficiency to unsecured creditors is calculated by subtracting the realizable value of assets from the total unsecured liabilities. The realizable value of assets is $50,000 (inventory) since the equipment is secured and does not count towards unsecured assets. The total unsecured liabilities are $115,000 (Accounts payable of $75,000 + Shareholders' equity of $45,000, which is a negative amount representing a deficit). Therefore, $115,000 (liabilities) - $50,000 (assets) = $65,000 deficiency.

A Company Has the Following Balance Sheet The Inventory Has a Realizable Value of $50,000, and the l