Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows:
The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage. Wages and salaries were earned within 90 days of filing the petition for bankruptcy and do not exceed $11,725 per employee. Liquidation expenses are expected to be $30,000.
Required:
1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts.
2. Billing Corporation was a supplier to Alitech Corporation and at the time of Alitech's bankruptcy filing, Billing's account receivable from Alitech was $40,000. On the basis of the estimates, how much can Billing expect to receive?

Question

Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows:
  The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage. Wages and salaries were earned within 90 days of filing the petition for bankruptcy and do not exceed $11,725 per employee. Liquidation expenses are expected to be $30,000.
Required:
1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts.
2. Billing Corporation was a supplier to Alitech Corporation and at the time of Alitech's bankruptcy filing, Billing's account receivable from Alitech was $40,000. On the basis of the estimates, how much can Billing expect to receive?

Quizplus · Accepted Answer

The Answer of Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows:
  The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage. Wages and salaries were earned within 90 days of filing the petition for bankruptcy and do not exceed $11,725 per employee. Liquidation expenses are expected to be $30,000.
Required:
1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts.
2. Billing Corporation was a supplier to Alitech Corporation and at the time of Alitech's bankruptcy filing, Billing's account receivable from Alitech was $40,000. On the basis of the estimates, how much can Billing expect to receive?

Alitech Corporation Is Liquidating Under Chapter 7 of the Bankruptcy