Answer and explain the following. Show your work.

Alshon Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code. The balance sheet on July 31 20x7 is below

Assets:

Cash $4,000

Marketable Securities $20,000

Accounts Receivable (net) $75,000

Inventory $90,000

Prepaid Insurance $ 6,000

Land $50,000

Plant and Equipment (net) $250,000

Franchises $48,000

Total $543,000

Equities:

Accounts Payable $120,000

Wages Payable $13,000

Taxes Payable $20,000

Interest Payable $25,000

Notes Payable $125,000

Mortgages Payable $150,000

Common Stock ($5 par) $180,000

Retained Earnings (deficit) ($90,000)

Total $543,000

The following additional information is available:

1. Marketable securities consist of 2,000 shares of Bristol Inc. common stock. The market value per share of the stock is $8. The stock was pledged against a $20,000, 8 percent note payable that has accrued interest of $800.

2. Accounts receivable of $40,000 are collateral for a $35,000, 10 percent note payable that has accrued interest of $3,500.

3. Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000. The appraised value of the remainder of the inventory is $50,000.

4. Only $1,000 will be recovered from prepaid insurance.

5. Land is appraised at $65,000 and plant and equipment at $160,000.

6. It is estimated that the franchises can be sold for $15,000.

7. All the wages payable qualify for priority.

8. The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000. The accrued interest on the mortgages is $7,500.

9. Estimated legal and accounting fees for the liquidation are $10,000.

Required:

a. Prepare a statement of affairs as of December 31, 2016.

b. Compute the estimated percentage settlement to unsecured creditors.

c. Answer and explain the following. Show your work.

Answer and explain the following. Show your work. Alshon Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code. The balance sheet on July 31 20x7 is below Assets: Cash Marketable Securities Accounts Receivable (net) Inventory Prepaid Insurance Land Plant and Equipment (net) Franchises Total $4,000 $20,000 $75,000 $90,000 $ 6,000 $50,000 $250,000 $48,000 $543,000 Equities: Accounts Payable Wages Payable Taxes Payable Interest Payable Notes Payable Mortgages Payable Common Stock ($5 par) Retained Earnings (deficit) Total $120,000 $13,000 $20,000 $25,000 $125,000 $150,000 $180,000 ($90,000) $543,000 The following additional information is available: 1. Marketable securities consist of 2,000 shares of Bristol Inc. common stock. The market value per share of the stock is $8. The stock was pledged against a $20,000, 8 percent note payable that has accrued interest of $800. 2. Accounts receivable of $40,000 are collateral for a $35,000, 10 percent note payable that has accrued interest of $3,500. 3. Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000. The appraised value of the remainder of the inventory is $50,000. 4. Only $1,000 will be recovered from prepaid insurance. 5. Land is appraised at $65,000 and plant and equipment at $160,000. 6. It is estimated that the franchises can be sold for $15,000. 7. All the wages payable qualify for priority. 8. The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000. The accrued interest on the mortgages is $7,500. 9. Estimated legal and accounting fees for the liquidation are $10,000. Required: a. Prepare a statement of affairs as of December 31, 2016. b. Compute the estimated percentage settlement to unsecured creditors. c. Answer and explain the following. Show your work. Alshon Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code. The balance sheet on July 31 20x7 is below Assets: Cash $4,000 Marketable Securities $20,000 Accounts Receivable (net) $75,000 Inventory $90,000 Prepaid Insurance $ 6,000 Land $50,000 Plant and Equipment (net) $250,000 Franchises $48,000 Total $543,000 Equities: Accounts Payable $120,000 Wages Payable $13,000 Taxes Payable $20,000 Interest Payable $25,000 Notes Payable $125,000 Mortgages Payable $150,000 Common Stock ($5 par) $180,000 Retained Earnings (deficit) ($90,000) Total $543,000 The following additional information is available: 1. Marketable securities consist of 2,000 shares of Bristol Inc. common stock. The market value per share of the stock is $8. The stock was pledged against a $20,000, 8 percent note payable that has accrued interest of $800. 2. Accounts receivable of $40,000 are collateral for a $35,000, 10 percent note payable that has accrued interest of $3,500. 3. Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000. The appraised value of the remainder of the inventory is $50,000. 4. Only $1,000 will be recovered from prepaid insurance. 5. Land is appraised at $65,000 and plant and equipment at $160,000. 6. It is estimated that the franchises can be sold for $15,000. 7. All the wages payable qualify for priority. 8. The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000. The accrued interest on the mortgages is $7,500. 9. Estimated legal and accounting fees for the liquidation are $10,000. Required: a. Prepare a statement of affairs as of December 31, 2016. b. Compute the estimated percentage settlement to unsecured creditors. Part a. Alshon CorporationStatement of AffairsDecember 31, 2016AssetsEstimatedEstimatedEstimatedAmount AvailableGainBookCurrentto Unsecured(Lcss) onValueValuesaimsRealization(1) Assets pledged with fully securedcreditors:$40,000Accounts receivable (net)$40,000Less: 10% note payable andinterest(38,500)$1,50050,000Land$65,000$15,000110,000Plant and equipment (net)100,000(10,000)$165,000Less: Mortgages payableand interest(157,500)7,500(2) Assets pledged with partiallysecured creditors:20,000Marketable securities$16,000(4,000)Less: 10% note payableand interest(20,800)35,000Inventory$32,000(3,000)Less: Accounts payable(60,000)(3) Free assets:4,000Cash$4,0004,00035,000Accounts receivable (net)35,00035,00055,000Inventory50,00050,000(5,000)6,000Prepaid insurance1,0001,000(5,000)140,000Plant and equipment (net)60,00060,000(80,000)48,000Franchises15,00015,000(33,000)Estimated amount available$174,000Less: Creditors with priority(43,000)Net available to unsecured creditors$131,000Estimated deficiency45,000$543,000($125,000)Total unsecured debt$176,000 EquitiesEstimatedBookAmountValueUnsecured(1) Fully secured creditors:$38,50010% notepayable and interest$38,500157,500Mortgages payable and interest157,500$196,000(2) Partially secured creditors:20,8008% note payable and interest$20,800Less: Marketable securities(16,000)$4,80060,000Accounts payable$60,000Less: Inventoty(32,000)28,000(3) Creditors with priority:0Estimated liquidation expenses$10,00013,000Wages payable13,00020,000Taxes payable20,000$43,000(4) Umecured creditors:60,000Accounts payable60,00070,000Notespayable70,00013,200Interest payable13,200(5) Stockholders' equity:180,000Common stock(90,000)Retained earnings (deficit)$543,000$176.000 EXPLANATION AND CALCULATIONS 1. Accounts payable= 40,000 - 10% note payable and interest =38,500 Estimated unsecured amount available -= (40,000-38,500) =1,500 2. Estimated gain on land = estimated current value- book value = (65,000-50,000)=15,000 3. Estimated loss on plant & equipment = estimated value- book value = (100,000-110,000) = (10,000) 4. The total of the book value should add up to %543,000 as seen from the tables above 5. The estimated gain and loss on realization should balance with estimated amounts available to unsecured aims Part b. The estimated percentage settlement to unsecured creditors = net estimated amounts available to unsecured aims / net estimated gain and loss on realization The estimated percentage = $131,000/ $176,000 = 0.7443 = 74.43% Alshon Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code. The balance sheet on July 31 20x7 is below Assets: Cash $4,000 Marketable Securities $20,000 Accounts Receivable (net) $75,000 Inventory $90,000 Prepaid Insurance $ 6,000 Land $50,000 Plant and Equipment (net) $250,000 Franchises $48,000 Total $543,000 Equities: Accounts Payable $120,000 Wages Payable $13,000 Taxes Payable $20,000 Interest Payable $25,000 Notes Payable $125,000 Mortgages Payable $150,000 Common Stock ($5 par) $180,000 Retained Earnings (deficit) ($90,000) Total $543,000 The following additional information is available: 1. Marketable securities consist of 2,000 shares of Bristol Inc. common stock. The market value per share of the stock is $8. The stock was pledged against a $20,000, 8 percent note payable that has accrued interest of $800. 2. Accounts receivable of $40,000 are collateral for a $35,000, 10 percent note payable that has accrued interest of $3,500. 3. Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000. The appraised value of the remainder of the inventory is $50,000. 4. Only $1,000 will be recovered from prepaid insurance. 5. Land is appraised at $65,000 and plant and equipment at $160,000. 6. It is estimated that the franchises can be sold for $15,000. 7. All the wages payable qualify for priority. 8. The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000. The accrued interest on the mortgages is $7,500. 9. Estimated legal and accounting fees for the liquidation are $10,000. Required: a. Prepare a statement of affairs as of December 31, 2016. b. Compute the estimated percentage settlement to unsecured creditors. Part a. Alshon CorporationStatement of AffairsDecember 31, 2016AssetsEstimatedEstimatedEstimatedAmount AvailableGainBookCurrentto Unsecured(Lcss) onValueValuesaimsRealization(1) Assets pledged with fully securedcreditors:$40,000Accounts receivable (net)$40,000Less: 10% note payable andinterest(38,500)$1,50050,000Land$65,000$15,000110,000Plant and equipment (net)100,000(10,000)$165,000Less: Mortgages payableand interest(157,500)7,500(2) Assets pledged with partiallysecured creditors:20,000Marketable securities$16,000(4,000)Less: 10% note payableand interest(20,800)35,000Inventory$32,000(3,000)Less: Accounts payable(60,000)(3) Free assets:4,000Cash$4,0004,00035,000Accounts receivable (net)35,00035,00055,000Inventory50,00050,000(5,000)6,000Prepaid insurance1,0001,000(5,000)140,000Plant and equipment (net)60,00060,000(80,000)48,000Franchises15,00015,000(33,000)Estimated amount available$174,000Less: Creditors with priority(43,000)Net available to unsecured creditors$131,000Estimated deficiency45,000$543,000($125,000)Total unsecured debt$176,000 EquitiesEstimatedBookAmountValueUnsecured(1) Fully secured creditors:$38,50010% notepayable and interest$38,500157,500Mortgages payable and interest157,500$196,000(2) Partially secured creditors:20,8008% note payable and interest$20,800Less: Marketable securities(16,000)$4,80060,000Accounts payable$60,000Less: Inventoty(32,000)28,000(3) Creditors with priority:0Estimated liquidation expenses$10,00013,000Wages payable13,00020,000Taxes payable20,000$43,000(4) Umecured creditors:60,000Accounts payable60,00070,000Notespayable70,00013,200Interest payable13,200(5) Stockholders' equity:180,000Common stock(90,000)Retained earnings (deficit)$543,000$176.000 EXPLANATION AND CALCULATIONS 1. Accounts payable= 40,000 - 10% note payable and interest =38,500 Estimated unsecured amount available -= (40,000-38,500) =1,500 2. Estimated gain on land = estimated current value- book value = (65,000-50,000)=15,000 3. Estimated loss on plant & equipment = estimated value- book value = (100,000-110,000) = (10,000) 4. The total of the book value should add up to %543,000 as seen from the tables above 5. The estimated gain and loss on realization should balance with estimated amounts available to unsecured aims Part b. The estimated percentage settlement to unsecured creditors = net estimated amounts available to unsecured aims / net estimated gain and loss on realization The estimated percentage = $131,000/ $176,000 = 0.7443 = 74.43%