A company enters Chapter 7 bankruptcy proceedings. Its balance sheet, prepared using GAAP for a company with continuing operations, is as follows:

Cash

$ 15,000

Accounts payable

$ 90,000

Inventories

100,000

Loans payable

300,000

Plant and equipment, net

250,000

Equity (deficit)

(25,000)

Total

$365,000

Total

$365,000

The plant and equipment is security for one of the loans, with a balance of $130,000. The other liabilities are unsecured. The following transactions occur:

*

Inventories with a book value of $60,000 were sold for $40,000.

*

The plant and equipment was sold for $200,000. The loan secured by the plant and equipment was paid.

*

Wages and administrative expenses of $10,000 were accrued.

*

An initial payment of 40 cents per dollar of indebtedness was paid to the unsecured creditors.

The statement of realization and liquidation reports "liabilities to be liquidated" of:

A.$400,000B.$166,000C.$260,000D.$390,000