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1. A company has the following balance sheet: Plant and equipment $500,000 Loans payable $150,000 Mortgage payable 300,000 _______ Shareholders equity 50,000 Total $500,000 Total

1. A company has the following balance sheet:

Plant and equipment

$500,000

Loans payable

$150,000

Mortgage payable

300,000

_______

Shareholders equity

50,000

Total

$500,000

Total

$500,000

The plant and equipment has a realizable value of $350,000, and is pledged as security for the mortgage. The estimated deficiency to unsecured creditors is:

a. $ 50,000

b. $100,000

c. $150,000

d. $200,000

2. A company has the following balance sheet:

Inventory

$ 60,000

Accounts payable

$ 75,000

Equipment, net

150,000

Loan payable

180,000

_______

Shareholders equity

(45,000)

Total

$210,000

Total

$210,000

The inventory has a realizable value of $50,000, and the equipment has a realizable value of $140,000. The equipment secures the loan payable and the accounts payable are unsecured. The estimated deficiency to unsecured creditors is:

a. $115,000

b. $ 45,000

c. $140,000

d. $ 65,000

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