The Not So Fine Manufacturing Co. Ltd. was adjudged bankrupt on a petition of its creditors, and the trustee in bankruptcy realized the following amounts from the sale of its business assets:

Cash in Bank $1,000

Accounts Receivable 42,000

Inventories 25,000

Land & Buildings 74,000

The liabilities of the business were as follows at the time of the receiving order: (Assume all secured creditors had taken the necessary steps to protect their security.)

Bank loan secured under section 427		$40,000
Trade accounts payable		65,000
Municipal taxes payable ($2,500 per year)		7,500
Wages payable (3 months @ $3,000 per month – two employees)		18,000
First mortgage on land & buildings		50,000
Second mortgage on land & buildings		25,000

The expenses of liquidation were $5,000. The trustee’s fee was $3,000.

Your Task:

1. Show the order in which the trustee in bankruptcy made payments to the various types of creditors. Assume that all secured creditors had taken the necessary steps to protect their security.

2. Determine how many cents on the dollar the general creditors should receive.

Note that all monetary amounts must be entered in this format for the computer to score them correctly: $10,000 [dollar sign, followed by thousands digits, followed by comma, followed by hundreds digits -- do not space after the last digit]

LIST OF CREDITORS (Type exactly as given when filling in the blanks below.)

Trade accounts	Municipal Taxes
Wages	S427 Bank loan
First mortgage	Second mortgage
Liquidation expenses	Trustee’s fees

1

Solution Worksheet

1. Total of liquidated assets: $

2. Less payments to secured creditors (show in order from HIGHEST TO LOWEST):

Total of payments to secured creditors: ($ )

3. Less payments to preferred creditors (show in the correct order):

Total of payments to preferred creditors: ($ )

Total left to pay general creditors: $

4. Payments to general creditors (show in order from HIGHEST TO LOWEST):

Total owed to general creditors: $

5. Each general creditor would receive on the dollar.

(Enter amount in the blank using this format ROUNDED to four digits: $0.1234)