Statement of affairs, dividend to unsecured creditors without priority. Tabco Industries, Inc., has submitted to the bankruptcy courts a plan of reorganization seeking relief under In order to evaluate the reasonableness of the plan, it must be evaluated against the alternative of a corporate liquidation. The following condensed trial balance and estimates of net realizable values have been prepared as of July 1, 20X9.
|
Book Values |
Estimated Net Realizable |
||
|
Debit |
Credit |
||
|
Cash |
$ 2,000 |
$ 2,000 |
|
|
Accounts receivable |
158,000 |
126,400 |
|
|
Inventory |
74,000 |
60,600 |
|
|
Other current assets |
16,000 |
12,000 |
|
|
Property, plant, and equipment (net) |
420,000 |
440,000 |
|
|
Other assets |
12,000 |
0 |
|
|
Accounts payable |
|
$180,000 |
|
|
Other current liabilities |
|
134,000 |
|
|
Mortgage and related interest payable |
|
300,000 |
|
|
Other noncurrent debt |
|
50,000 |
|
|
Owners’ equity |
|
18,000 |
|
|
Total |
$682,000 |
$682,000 |
$641,000 |
Accounts payable totaling $50,000 are secured by inventory with a book value of $50,000 and a fair value of $42,000. The mortgage and the related interest payable are fully secured by land and building having a book value of $284,000 and a net realizable value of $330,000. The other noncurrent debt represents an unsecured loan from officers of the corporation. The other current liabilities, in part, include:
|
Unpaid wages (less than $4,000 per individual) |
$ 20,000 |
|
Customer deposits (less than $1,800 per customer) |
14,000 |
|
Real estate taxes (having a lien on the land and building) |
18,000 |
|
Undeposited payroll taxes |
8,000 |
|
Accounts receivable assigned (receivables are estimated to be 90% collectible) |
64,000 |
|
Total |
$124,000 |
The trial balance does not include $7,000 of estimated expenses to administer the liquidation.
Prepare a statement of affairs for Tabco and calculate the estimated dividend to general unsecured creditors with and without priority.