The balance sheet of Val at June 30, 2016, contains the following items:
Assets
Cash ................................................... $40,000
Accounts receivable-net ......................... 70,000
Inventories ....................................... 50,000
Land .............................................. 30,000
Building-net ...................................... 200,000
Machinery-net ...................................... 60,000
Goodwill .............................................. 50,000
........................................................... $500,000
Equities
Accounts payable ..................................... $110,000
Wages payable ........................................ 60,000
Property taxes payable .............................. 10,000
Mortgage payable .................................... 150,000
Interest on mortgage payable ...................... 15,000
Note payable-unsecured .......................... 50,000
Interest payable-unsecured ..................... 5,000
Capital stock ....................................... 200,000
Retained earnings deficit ......................... (100,000)
..................................................... $500,000
Val is in financial difficulty, and its stockholders and creditors have requested a statement of affairs for planning purposes. The following information is available:
1. The company estimates that $63,000 is the maximum amount collectible for the accounts receivable.
2. Except for 20 percent of the inventory items that are damaged and worth only $2,000, the cost of the other items is expected to be recovered in full.
3. The land and building have a combined appraisal value of $170,000 and are subject to the $150,000 mortgage and related accrued interest.
4. The appraised value of the machinery is $20,000.
5. Wages payable and property taxes payable are unsecured priority items that do not exceed any limitations of the bankruptcy act.
REQUIRED
1. Prepare a statement of affairs for Val as of June 30, 2016.
2. Compute the estimated settlement per dollar of unsecured liabilities.