question archive Fabulous Fakes Corporation is being liquidated under Chapter 7 of the bankruptcy act
Fabulous Fakes Corporation is being liquidated under Chapter 7 of the bankruptcy act
Subject:ManagementPrice: Bought3
Fabulous Fakes Corporation is being liquidated under Chapter 7 of the bankruptcy act. All assets have been converted into cash, and $374,500 cash is available to pay the following claims:
| 1. | Administrative expenses of preserving and liquidating the debtor corporation’s estate | $12,500 |
| 2. | Merchandise creditors | 99,000 |
| 3. | Local government for property taxes | 4,000 |
| 4. | Local bank for unsecured loan (principal is $30,000 and interest is $4,500) | 34,500 |
| 5. | State government for gross receipts taxes | 3,000 |
| 6. | Employees for unpaid wages during the month before filing (includes $12,275 for the company president and less than $11,725 for each of the other employees) | 48,000 |
| 7. | Customers for prepaid merchandise that was not delivered | 1,500 |
| 8. | Holders of the first mortgage on the company’s real estate that was sold for $240,000 (includes $220,000 principal and $8,500 interest) | 228,500 |
Assume that all the claims are allowed and that they were timely filed.
Required
Rank the claims according to priority under the bankruptcy act.
