P18-3 Claims rankings and cash distribution upon liquidation Jun is being liquidated under Chapter 7 of the bankruptcy act. All of Jun’s assets have been converted into cash, and $400,000 cash is available to pay the following claims:

1. Administrative expenses for liquidation $10,000 2. Merchandise creditors who are secured by inventories that were sold for

$80,000 during the liquidation period 75,000 3. Merchandise creditors 24,000 4. Mortgage holders of company’s real estate that was sold for $300,000

(includes $250,000 principal and $25,000 interest)

275,000 5. Local government property taxes 3,500 6. State government for gross receipts taxes 2,500 7. Employees for unpaid wages one month before filing

(includes less than $4,000 per employee)

45,000 8. Local bank for unsecured loans (principal is $25,000 and Interest is $5,000)

30,000 9. Customers for prepaid merchandise that was not delivered 2,000 Assume that all the claims are allowed and they were timely filed, except for the unpaid wages.

REQuIRED 1. Rank the claims in accordance to priority under the bankruptcy act.