Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $14,000 and accounts receivable of $33,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $16,000 each. Plots C and D cost the company $28,000 and $33,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $23,000 each. Presently, the land can be sold for the following: Plot A Plot B Plot C Plot D $ 24,000 $ 19,000 $ 22,000 43,000 Another $26,000 note payable is unsecured. Accounts payable at this time total $48,000. Of this amount, $9,000 is salary owed to the company's workers. No employee is due more than $4,200 The company expects to collect $20,000 from the accounts receivable if liquidation becomes necessary. Administrative expenses required for liquidation are anticipated to be $41,100 a. Prepare a statement of financial affairs for Oregon Corporation. b. If the company is liquidated, how much cash would be paid on the note payable secured by plot B? c. If the company is liquidated, how much cash would be paid on the unsecured note payable? d. If the company is liquidated and plot D is sold for $46,500, how much cash would be paid on the note payable secured by plot B? Prepare a statement of financial affairs for Oregon Corporation OREGON CORPORATION Statement of Financial Affairs Available for Unsecured Creditors Book Values Assets Pledged with Fully Secured Creditors $49,000Land (Plots A and D) $ 67,000 (46,000 21,000 Less: Notes payable Pledged with Partially Secured Creditors Land (Plots B and C) Less: Notes payable Free Assets 44.000 41,000 46,000 14,000 20,000 14,000 Cash 33,000Accounts receivable Total available to pay liabilities with priority and unsecured creditors Less: Liabilities with priority $ 55,000 50,100 Available for unsecured creditors $ 4,900 65,100 $ 70,000 Unsecured Nonpriority Estimated deficiency $ 140,000 Book Values Liabilities and Stockholders' Equity Liabilities Liabilities with Priority: Administrative expenses $ 41,100 9,000 $ 9,000 Salaries payable Total $ 50,100 Fully Secured Creditors: 46,000 Notes payable 46,000 41,000 Land (Plots A and D) Partially Secured Creditors 46,000 Notes payable 46,000 (41,0005,000 Land (Plots B and C) Unsecured Creditors 2600 Notes payable 39,000 Accounts payable 26,000 39,000 (26,000) Stockholders' equity $ 140,000 $ 70,000 b. Amount paid c. Amount paid d. Amount paid $ 19,000 * $ 1,560
