Hampton Company Is Trying to Decide Whether to Seek Liquidation

question 73

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:

Protist

A diverse group of eukaryotic organisms, mostly unicellular, that are not plants, animals, or fungi, including amoebas, algae, and plasmodium.

Prokaryote

Informal term for a single-celled organism without a nucleus; a bacterium or archaeon.

Contractile Vacuole

An organelle found in some protozoa, which expels excess liquid on contraction.

Euglenoids

A diverse group of unicellular protists, often with photosynthetic capabilities, belonging to the genus Euglena.