Assignment:
Fabulous Fakes Corporation is being liquidated under 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.
Rank the claims according to priority under the bankruptcy act.
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.