3. Quincy Corp., about to be liquidated, has the following amounts for its asset
ID: 2566523 • Letter: 3
Question
3. Quincy Corp., about to be liquidated, has the following amounts for its assets and liabilities: Current Assets = book value $200,000; net realizable value $100,000 Land = book value $70,000; net realizable value $140,000 Building = book value $500,000; net realizable value $350,000 Equipment = book value $300,000; net realizable value $160,000 Accounts Payable = book value $240,000 Income Taxes Payable = book value $60,000 Mortgage Payable = book value $510,000 Note Payable = book value $80,000 How much should the mortgage holder expect to collect from the liquidation?
MULTIPLE CHOICE
A. $474,000
B. $510,000
C. $450,000
D. $480,000
Explanation / Answer
Mortgage payable
Book Value
Fair value
Mortgage payable
510000
510000
Less:
Land
70000
140000
Building
500000
350000
Balance payable
20000
Notes Payable
Equipment
300000
160000
Less: Paid to
Notes Payable
80000
80000
Balance for Mortgage payable
80000
Amount Payable to Mortgage payable
Secured Assets
$4,90,000
Notes Payable
$20,000
Total payable
$5,10,000
Correct option is B. $510,000
Mortgage payable
Book Value
Fair value
Mortgage payable
510000
510000
Less:
Land
70000
140000
Building
500000
350000
Balance payable
20000
Notes Payable
Equipment
300000
160000
Less: Paid to
Notes Payable
80000
80000
Balance for Mortgage payable
80000
Amount Payable to Mortgage payable
Secured Assets
$4,90,000
Notes Payable
$20,000
Total payable
$5,10,000
Correct option is B. $510,000
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