Hampton Company Is Trying to Decide Whether to Seek Liquidation

question 78

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.
Compute the amount of total liabilities with priority.

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Definitions:

Spindle Fibers

Microtubule structures that form during cell division to separate chromosomes into the daughter cells.

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, regulating the entry and exit of substances.

Cytoplasm

Cytoplasm refers to the jelly-like substance within a cell, excluding the nucleus, that contains organelles and is the site of many metabolic processes.

Lysosomes

Membrane-bound organelles in the cytoplasm of eukaryotic cells containing enzymes that break down biomolecules.