Question $1$ continued

The land and building are pledged as security for the mortgage payable as well as any accrued

interest on the mortgage. The note payable is secured with the equipment, but the interest on

the note is unsecured. Wages and salaries were earned within $90$ days of filing the petition for

bankruptcy and pension plan contributions relate to services rendered within $6$ months of filing

the petition for bankruptcy; neither exceeds $$4,000$ per employee. Liquidation expenses are

expected to be $$40,000.$

Required:

Prepare a statement of affairs for Castle Frank Corporation showing the priority rankings of the

creditors and the expected payouts. $[18$ marks$]$