Question

Han is in bankruptcy and is being liquidated by a court-appointed trustee. The financial report that follows was prepared by the trustee just before the final cash distribution:

Assets

Cash $300,000

Approved Claims

Mortgage payable (secured by property that was sold for $100,000) $180,000

Accounts payable, unsecured 160,000

Administrative expenses payable, unsecured 16,000

Salaries payable, unsecured 4,000

Interest payable, unsecured 20,000

Total approved claims $380,000

The administrative expenses are for trustee fees and other costs of administering the debtor corporation’s estate.

Show how the $300,000 cash will be distributed to holders of each of the claims.

Answer 1