Question

Wrong Way Co. had cash of $65,000, inventory worth $117,000, and a building worth $169,000. The company’s debts consisted of accounts payable of $234,000, a note payable of $104,000 (secured by the inventory), liabilities with priority of $26,000, and a bond payable of $195,000 (secured by the building).

Prepare a schedule to show the amount of total payment on the bond.

Answer 1

Ans:

1) Free Assets after payment of liability with Priority:

Total Free Assets(.117000- $104000)= $13,000+ $65,000	$78,000
Less: Total Liabilities with Priority	($26000)
Total	$52,000

2) Unsecured Liabilities:

Excess of partially secured liabilities over pledged ($195,000- $169,000)	$26,000
Account payable	$234,000
Total	$260,000

3) Ratio

=$52,000 ÷ $260,000 = 20%

4) Amount of Bond Payable:

Value of Pledged assets	$ 169,000
20% Of remainig $ 26,000	$5200
Payment On Bonds	$ 174,200

answered by: anonymous