E18-2 Financial reporting during bankruptcy Use the following information in answering questions 1 and 2:

Hal Company filed for protection from creditors under Chapter 11 of the bankruptcy act on July 1, 2016. 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