Financial reporting during bankruptcy
Hal Company filed for protection from creditors under the bankruptcy act on July 1, 2011. Hal had the following liabilities at the time of filing:
|
10% mortgage bonds payable, secured by a building |
|
|
with a book value and fair value of $100,000 |
$200,000 |
|
Accrued interest on mortgage (January 1–July 1) |
10,000 |
|
Accounts payable |
80,000 |
|
Priority tax claims |
50,000 |
|
$340,000 |
1. The December 31, 2011, balance sheet will show prepetition liabilities of:
a $340,000 (the claims at filing)
b $240,000 (the original claims less the secured portion of the mortgage bonds)
c $350,000 (the original claims plus six months’ interest on the bonds)
d $290,000 (the original claims less the priority tax claims)