Problem 3: Dartmouth INC. is planning to file for bankruptcy under Chapter 7. Their balance sheet for the year ended Dec 31, 2017 is given below:

Balance Sheet on Dec 31, 2017

Assets	$	Liabilities and OE	$
Cash	16,400	Notes Payable	64,000
Note Receivable	48,000	Accounts Payable	390,000
Account Receivable	94,000	Salaries and wages Payable	27,000
Investments	35,000	Mortgage Payable	400,000
Inventory	205,400	Accrued Interest on:
Land	533,000	Notes Payable	2,200
Equipment	186,000	Mortgage Payable	17,000
		Share Capital	500,000
		Retained Earnings	(282,400)
Total	1,117,800	Total	1,117,800

1. The note receivable (realizable at $32,000) are pledged as collateral on the note payable in the principle amount of $40,000 plus interest $1,400.
2. The accounts receivable have an estimated realizable value of $50,000.
3. The investments (realizable at $15,000) are pledged as collateral on the note payable in the principle amount of $24,000 plus interest of $800.
4. Mortgage Payable along with interest payable of $17,000 is pledged against land that has a market value of 465,000. The estimated realizable values of inventory and equipment are $161,000 and 120,000 respectively.

Required: Prepare the statement of affairs by hand on a sheet of paper and answer the following questions. (You are not required to send this sheet of paper to your instructor):

1. (Related to Problem 3 of Dartmouth Inc.) 4. The free assets that are not linked to the payment any secured creditors are

1. Cash, Accounts receivable, inventory, equipment
2. Cash, land, Accounts receivable, inventory, equipment
3. Cash, land, Accounts receivable, inventory, equipment
4. Accounts receivable, inventory, equipment, note receivable