Hampton Company Is Trying to Decide Whether to Seek Liquidation

question 9

Essay

Hampton Company is trying to decide whether to seek liquidation or reorganization. Hampton has provided the following balance sheet: Additional information is as follows:The investments are currently worth $13,000.It is estimated that $32,000 of the accounts receivable are collectible.The inventory can be sold for $74,000.The prepaid expenses and the intangible assets have no net realizable value.The land and building are currently valued at $250,000.The equipment can be sold for $60,000.Administrative expenses (not yet recorded) are estimated to be $12,500.Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and $3,000 each to two other employees).Accrued expenses include $7,000 of unpaid payroll taxes.What is the payout percentage to unsecured creditors? (Round the percentage to a whole number and two decimal places.)

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Definitions:

Unethical Behaviour

Actions or practices that breach moral or professional conduct codes.

Public Trust

A principle under which assets or responsibilities are managed by the government or a legal body for the benefit of the community or the public at large.

Confidence

The state of feeling certain about the truth of something, often related to financial markets as investor confidence.

Corporate Social Responsibility

A business practice that involves participating in initiatives that benefit society.