AJ's Markets is being liquidated.The mortgage holder is owed $830,000,the other secured creditors are owed $128,000,and the unsecured creditors are owed $329,000.Administrative costs of liquidation,wage and benefit payments,and consumer claims amount to $330,000.The firm owes no taxes.The building,which is mortgaged,just netted $794,000 after sale costs.The remaining assets have yielded $467,000 in net proceeds.How much will the unsecured creditors receive per each dollar they are owed?

Question

Quizplus · Accepted Answer

First, we need to calculate the total amount of claims against the firm: 
830,000 (mortgage holder) + 128,000 (other secured creditors) + 329,000 (unsecured creditors) + 330,000 (administrative costs) = $1,617,000

Next, we need to calculate the total amount of funds available for distribution: 
794,000 (building sale) + 467,000 (remaining assets) = $1,261,000

We need to subtract the administrative costs, employee wages and benefits, and consumer claims from the funds available for distribution: 
1,261,000 - 330,000 = $931,000

Now, we can calculate the amount that each creditor will receive per dollar owed: 
Unsecured creditors will receive: 
931,000/329,000 = $2.83

Therefore, the unsecured creditors will receive $.025 per each dollar they are owed. Option B is the correct answer.

AJ's Markets Is Being Liquidated