Wilbur Corporation Is to Be Liquidated Under Chapter 7 of the Bankruptcy

question 11

Essay

Wilbur Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code. The balance sheet on December 31, 20X8, is as follows:
The following additional information is available:
1. Marketable securities consist of 2,000 shares of Bristol Inc. common stock. The market value per share of the stock is $8. The stock was pledged against a $20,000, 8 percent note payable that has accrued interest of $800.
2. Accounts receivable of $40,000 are collateral for a $35,000, 10 percent note payable that has accrued interest of $3,500.
3. Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000. The appraised value of the remainder of the inventory is $50,000.
4. Only $1,000 will be recovered from prepaid insurance.
5. Land is appraised at $65,000 and plant and equipment at $160,000.
6. It is estimated that the franchises can be sold for $15,000.
7. All the wages payable qualify for priority.
8. The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000. The accrued interest on the mortgages is $7,500.
9. Estimated legal and accounting fees for the liquidation are $10,000.
Required
a. Prepare a statement of affairs as of December 31, 20X8.
b. Compute the estimated percentage settlement to unsecured creditors.

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