Question

Xavier Company is going through a Chapter 7 bankruptcy. All assets have been liquidated, and the company retains only $25,500 in free cash. The following debts, totaling $39,550, remain:

Government claims to unpaid taxes	$	6,300
Salary during last month owed to Mr. Key (not an officer)		18,125
Administrative expenses		2,750
Salary during last month owed to Ms. Rankin (not an officer)		5,525
Unsecured accounts payable		6,850

Indicate how much money will be paid to the creditor associated with each debt.

Answer 1

	Money that will be paid to the Creditor associated with eachdebt:		Amount
	Administrative Expense		2750
	Salary during the last month owed to Mr Key & Ms Rankin		19175
	Government claims to unpaid taxes		3575
			25500
	Explanation:
	Ist Priority: Administrative Expense = $2750	2750
	IInd Priority for wages - $5525 for Ms Rankin $13650 for Mr Key	19175
	Total priority Claims = $21925	21925
	Now, all money will be given for Government Claims for unpaid taxes = $3575	3575
	Total of Free assets = $25500	25500
	Employee claims, including wages, salaries, commission, vacation, severance and sick leave earned. They are limited to $13,650 (as of April 1, 2019) earned within 180 days of the bankruptcy filing date or within 180 days of the business closure, if the business was not operating at the time the case was filed.