Name Brand Company is to be liquidated under Chapter 7 of the Bankruptcy Act. The balance sheet on July \(31,20 \mathrm{X} 1\), is as follows:

1. Marketable securities consist of 1,000 shares of Wooly Inc. common stock. The market value of the stock is \(\$ 22\). The stock was pledged against a \(\$ 28,000,10\) percent note payable that has accrued interest of \(\$ 1,400\).
2. Accounts receivable of \(\$ 50,000\) are collateral for a \(\$ 40,000,12\) percent note payable that has accrued interest of \(\$ 4,000\).
3. Inventory with a book value of \(\$ 79,000\) and a current value of \(\$ 75,000\) is pledged against accounts payable of \(\$ 105,000\). The appraised value of the remainder of the inventory is \(\$ 76,000\).
4. Only \(\$ 1,500\) will be recovered from prepaid insurance.
5. Land is appraised at \(\$ 110,000\) and plant and equipment at \(\$ 340,000\).
6. It is estimated that the franchises can be sold for \(\$ 30,000\).
7. All the wages payable qualify for priority.
8. The mortgages are on the land and on a building with a book value of \(\$ 162,000\) and an appraised value of \(\$ 150,000\). The accrued interest on the mortgages is \(\$ 14,600\).
9. Estimated legal and accounting fees for the liquidation are \(\$ 13,000\).
\section*{Required}

a. Prepare a statement of affairs as of July 31, 20X1.

b. Compute the estimated percentage settlement to unsecured creditors.

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Assets Cash Marketable Securities Accounts Receivable (net) Inventory Prepaid Insurance $ 5,000 30,000 105.000 160.000 7,000 Land 80.000 Plant and Equipment (net) 412,000 Franchises 72,000 Total $871.000 Equities Accounts Payable $265,000 Wages Payable Taxes Payable 20,000 12,000 Interest Payable 37,000 Notes Payable 280,000 Mortgages Payable 220,000 Common Stock ($20 par) 240,000 Retained Earnings (deficit) (203.000 Total $871,000