At the time of liquidation,Fairchild Company reported assets of $200,000,liabilities of $120,000,common stock of $70,000 and retained earnings of $10,000).What is the maximum amount of Fairchild's assets that the shareholders are entitled to receive?
A)$200,000
B)$80,000
C)$90,000
D)$100,000

Question

Quizplus · Accepted Answer

Creditors receive first priority in asset distribution during a business liquidation.Therefore,creditors would collect the $120,000 owed to them,leaving the shareholders with the remaining $80,000 ($70,000 common stock + $10,000 retained earnings).

At the Time of Liquidation,Fairchild Company Reported Assets of $200,000,liabilities