Mo' Joe Coffee shops is concerned as to whether its brand name is working

www.phoenixprince.com/CPA/BEC5/index7.html

Mo' Joe Coffee Houses budgeted sales of 120,000 units of its premier coffee at $3.50

My Answer: 28,750

solution available, contact lmcelroy@my.keller.edu

Norville Creations wants to achieve an after-tax profit...

http://www.phoenixprince.com/CPA/BEC5/index3.html

Generally, an organization will not operate beyond the limits of thier risk appetite

http://www.phoenixprince.com/CPA/BEC5/index1.html

Bankruptcy

Dart Inc., a closely held corporation, was petitioned involuntarily into bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. Dart contested the petition.
Dart has not been paying its business debts as they becamedue, has defaulted on its mortgage loan payments, and owes back taxes to the IRS. The total cash value of Dart's bankruptcy estate after the sale of all assets adn payment of administration expenses is $104,000.
Dart has the following creditors:

• Fracon Bank is owed $75,000 principal and accrued interest on a mortgage loan secured by Dart's real property. The property was valued at and sold, in bankruptcy, for $70,000.
• The IRS has a $12,000 recorded judgment for unpaid corporate income tax.
• JOG Office Supplies has an unsecured claim of $2,000 that was timely filed.
• Nanstar Electric Co. has an unsecured claim of $1,200 that was not timely filed.
• Decoy Publications has a claim of $20,000, of which $2,000 is secured by Dart's inventory that was valued and sold, in bankruptcy, for $2,000. The claim was timely filed.

Assume that the bankruptcy estate was distributed.

What total dolar amount would Fracon Bank receive on its secured and unsecured claims?

a. $70,000

b. $72,000

c. $74,000

d. $75,000

Answer: c

In distributing a bankruptcy estate, first all secured claims are paid, then priority claims are paid, and finally the remaining assets are split proportionally among the unsecured creditors who have timely filed a claim. Thus, Fracon Bank, is entitled to the $70,000 secured by the mortgage and Decoy is entitled to its $2,000 security first. The IRS has a priority claim for $12,000, which will next be paid. Thus, only $20,000 remains to pay the unsecured debt, which amounts to $25,000 ($5,000 remaining on the Fraco Bank debt, $2,000 to JOG, $18,000 to Decoy; Nanstar does not share in the distribution because it failed to file a claim). The unsecured creditors will share in the remainder of the estate proportionally. Thus, in addition to the $70,000 from the sale of the mortgaged property, Fracon is entitled to 4/5 of the $5,000 debt remaining on its loan to Dart, for a total of $74,000.

The guaranty must be in writing

A party contracts to guaranty the collection of the debts of another. As a result of the guaranty, which of the following statements is correct?

a. The creditor may proceed against the guarantor without attempting to collect from the debtor.
b. The guaranty must be in writing.
c. The guarantor may use any defesnses available to the debtor.
d. The creditor must be notified of the debtor's default by the guarantor.

Choice: b

The Statute of Frauds requires promises to pay the debts of another to be evidenced by a writing containing the material terms.

Subrogation

From the topic Regulation 6. Commercial Paper, Secured Transactions and Suretyship, Suretyship and Creditor's Rights.

Subrogation is a remedy when a principal debtor defaults and a surety pays the creditor the entire obligation, this remedy gives the surety the best method of collecting from the debtor.