Quincy Corp., about to be liquidated, has the following amounts for its assets and liabilities: The mortgage is secured by the land and building, and the note payable is secured by the equipment. Quincy expects that the expenses of administering the liquidation will total $40,000.
How much should the mortgage holder expect to collect from the liquidation?

Question

Quincy Corp., about to be liquidated, has the following amounts for its assets and liabilities:  The mortgage is secured by the land and building, and the note payable is secured by the equipment. Quincy expects that the expenses of administering the liquidation will total $40,000.
How much should the mortgage holder expect to collect from the liquidation?

Quizplus · Accepted Answer

Land and building sold for $450,000 leaves $60,000 unsecured still owing.40% × $60,000 = $24,000Mortgage holder expects $450,000 + $24,000 = $474,000