29. Shi Company is going through a Chapter 7 bankruptcy.

All assets have been liquidated,

and the company retains only $27,700 in free cash. The following debts, totaling $43,050,
remain:

Government claims to unpaid taxes $ 7,000

Salary during last month owed to Mr. Key (not an officer) 19,200.
Administrative expenses… 3,450
Salary during last month owed to Ms. Rankin (not an officer). 5,850
Unsecured accounts payable.... 7,550
Indicate how much money will be paid to the creditor associated with each debt.

30. Ataway Company has suffered severe financial difficulties and is considering filing a
bankruptcy petition. It has the following assets and liabilities. The assets are stated at net
realizable value.

Assets (pledged against debts of $70,000) $116,000

(partially secured) (lia with priority)
Assets (pledged against debts of $130,000) 50,000
Other assets 80,000
(lia with priority)
Liabilities with priority 42,000
Other unsecured creditors 200,000
If the company is liquidated, how much money will be paid on the partially secured
debt?

36. A company going through a Chapter 7 bankruptcy has the following account balances:

Cash $ 30,000
Receivables (30% collectible). 50,000
Inventory (worth $39,000) 90,000.
Land (worth $120,000) (secures note payable) 100,000
Buildings (worth $180,000) (secures bonds payable) 200,000
Salaries payable (Four workers owed equal amounts for last two weeks) 10,000
Accounts payable 90,000
Note payable (secured by land) 110,000
Bonds payable (secured by building) 300,000
Common stock 100,000
Retained earnings. (140,000)
How much will be paid to each of the following?
 Salaries payable
 Accounts payable
 Note payable
 Bonds payable

38. The Larisa Company is exiting bankruptcy reorganization with the following account
balances:
Net Book Value Fair Value
Receivables $ 80,000 $ 90,000
Inventory. 200,000 210,000
Buildings 300,000 400,000
Liabilities. 800,000 800,000
Common stock 130,000
Additional paid-in capital 20,000
Retained earnings (deficit) (370,000)
Larisa Company's assets have a $760,000 reorganization value. As part of the
reorganization plan, the company's owners transferred 80 percent of the outstanding stock
to the creditors in exchange for a $500,000 reduction in the liabilities.
Prepare the journal entry (or entries) necessary to adjust the company's records to
fresh start accounting.
45. The following balance sheet has been prepared by the accountant for Limestone
Company as of June 3, 2024, the date on which the company is to file a voluntary petition of
bankruptcy:
LIMESTONE COMPANY
Balance Sheet
June 3, 2024
Assets
Cash 3,000
Accounts receivable (net) 65,000
Inventory. 88,000
Land 100,000
Buildings (net) 300,000
Equipment (net). 180,000
Total assets. $736,000
Liabilities and Equities
Accounts payable… $ 98,000
Notes payable-current 250,000
(secured by equipment).
Notes payable-long term 190,000
(secured by land and buildings).
Common stock 120,000
Retained earnings 78,000
Total liabilities and equities $736,000
Additional Information
 If the company is liquidated, administrative expenses are estimated at $18,000.
 The accounts payable figure includes $10,000 in wages earned by the company's 12
employees during May. No one earned more than $2,200 of that total.
 Liabilities do not include taxes of $14,000 owed to the U.S. government.
 Company officials estimate that 40 percent of the accounts receivable will be
collected in a liquidation and that the inventory disposal will bring $80,000.
 The land and buildings will be sold together for approximately $310,000; the
equipment should bring $130,000 at auction.
Prepare a statement of financial affairs for Limestone Company as of June 3, 2024.
47. Anteium Company owes $80,000 on a note payable that is currently due. The note is
held by a local bank and is secured by a mortgage lien attached to three acres of land worth
$48,000. The land originally cost Anteium $31,000 when acquired several years ago. The
only other account balances for this company are investments of $20,000 (worth
$25,000), accounts payable of $20,000, common stock of $40,000, and a deficit of
$89,000. Anteium is insolvent and attempting to arrange a bankruptcy reorganization so
the business can continue to operate and employees can retain their jobs. The
reorganization value of the company is $82,000.
View each of the following as an independent situation:
a. On a statement of financial affairs, how is the note payable reported? How is the land
shown?
b. Assume that Anteium develops an acceptable reorganization plan. Sixty percent of the
common stock is transferred to the bank to settle the note payable. A 7 percent, three-year
note payable for $5,000 is issued to settle the accounts payable. How would Anteium
record the reorganization?
c. Assume that Anteium is liquidated. The land and investments are sold for $50,000 and
$26,000, respectively. Administrative expenses amount to $11,000. How much will the
various parties collect?
48. The owners of Litz Corporation have decided to liquidate the business because
operating profits have declined dramatically in recent years. The following balance sheet
has been produced for Litz as of August 8, 2024, the date on which the company begins to
sell its assets as buyers can be found.
LITZ CORPORATION
Balance Sheet August 8, 2024
Assets
Cash $ 16,000
Accounts receivable (net) 82,000
Investments 32,000
Inventory (net realizable value is expected to approximate cost) 69,000
Land… 30,000
Buildings (net) 340,000
Equipment (net). 210,000
Total assets $779,000
 Liabilities and Equities
Accounts payable.... $150,000
Notes payable-current (secured by inventory) 132,000
Notes payable-long term [secured by land
and buildings (valued at $300,000)]. 259,000
Common stock 135,000
Retained earnings 103,000
Total liabilities and equities. $779,000

The following events occur during the liquidation process:

 The investments are sold for $39,000.
 The inventory is sold at auction for $48,000.
 The money derived from the inventory is applied against the current notes payable.
 Administrative expenses of $15,000 are incurred in connection with the liquidation.
 The land and buildings are sold for $315,000. The long-term notes payable are paid.
 The accountant determines that $34,000 of the accounts payable are liabilities with
priority.
 The company's equipment is sold for $84,000.
 Accounts receivable of $34,000 are collected. The remainder of the receivables is
considered uncollectible.
 The administrative expenses are paid.
a. Prepare a statement of realization and liquidation for the period just described.
b. What percentage of their claims should the unsecured creditors receive?