Chapter 6
Problem I1. Statement of Affairs - Formal
MINER COMPANY Statement of Affairs May 31, 2012 Book Value Assets Realizable Value Assets Pledged with Fully Secured Creditors:
P 50,000 Notes Receivable P39,800
1,200 Accrued Interest Rec. 1,000 P 40,800
Notes Payable 40,000
Accrued Interest Pay. 800 40,800
119,000 Building 75,000
Note Payable 20,000
Accrued Interest Pay. 800 20,800 P 54,200 Assets Pledged with Partially Secured Creditors:
13,200 Equipment 4,200 Note Payable 10,000 Free Assets 6,000 Cash 6,000 61,000 Accounts Receivable 50,000 60,000 Inventory 30,000 1,100 Prepaid Insurance 400 8,500 Goodwill 0
Total Net Realizable Value 140,600
Liabilities having Priority – Wages 6,000
Taxes 2,400 8,400
Net Free Assets 132,200
Estimated Deficiency to Unsecured Creditors 53,600
P 320,000 P 185,800
Book
Value Equities Unsecured
Liabilities Having Priority:
P 6,000 Accrued Wages P 6,000
2,400 Taxes Payable 2,400 P 8,400
Fully Secured Creditors:
60,000 Notes Payable 60,000
1,600 Accrued Interest Payable 1,600 61,600 Partially Secured Creditors:
10,000 Note Payable 10,000
Unsecured Creditors: 170,000 Accounts Payable 170,000 10,000 Notes Payable 10,000 Stockholders’ Equity 110,000 Common Stock
( 50,000) Retained Earnings (Deficit)
P 320,000 P 185,800
2. Deficiency Statement to determine estimated deficiency to unsecured creditors: Deficiency Account
May 31, 2012
Estimated Losses: Estimated Gains:
Accounts Receivable P 11,000 Common Stock P 110,000
Notes Receivable 10,400 Retained Earnings (50,000)
Inventory 30,000 Estimated Deficiency to
Buildings 44,000 Unsecured Creditors 53,600
Equipment 9,000
Prepaid Insurance 700
Goodwill 8,500
P113,600 P 113,600
Estimated final dividend rate to unsecured creditors is: P132,200/P185,800 = 71.15% Problem II
1. Formal
Down Dog Corporation Statement of Affairs
June 30, 2014
Deficiency Account
Book Value Assets Realizable Value (Loss/Gain)
Pledged with partially secured creditors
P165,000 Equipment-net P87,000 (78,000) Less: Note payable and accrued interest (96,000) P 0
Unsecured amount (See below) (9,000)
Free Assets
3,000 Cash 3,000
72,000 Accounts receivable-net 48,000 (24,000)
60,000 Inventories 72,000 12,000
Total net realizable value 123,000 Less: Priority liabilities – wages payable (45,000) Total available for unsecured creditors 78,000
______ Estimated deficiency to unsecured creditors 30,000 ______
Unsecured
Book Value Equities Liabilities
Priority liabilities
P 45,000 Wages payable (assumed under
P4,650 per employee) P 45,000
Partially secured creditors
96,000 Note payable and accrued interest P 96,000
Less: Equipment pledged as security (87,000) P 9,000
Unsecured creditors
72,000 Accounts payable 72,000
27,000 Rent payable 27,000
Stockholders’ equity
180,000 Capital stock 180,000
(120,000) Retained earnings (deficit) ______ (120,000)
P300,000 P108,000 P 60,000
Estimated Deficiency P(30,000)
2. Estimated payments per dollar for unsecured creditors
Cash available P210,000
Distribution to partially secured and unsecured priority creditors:
Note payable and interest P87,000
Administrative expenses 24,000
Wages payable 45,000 (156,000)
Available to unsecured nonpriority creditors P 54,000
Note payable and interest (unsecured portion) P 9,000
Accounts payable 72,000
Rent payable 27,000
Unsecured nonpriority claims P108,000
(P54,000 / P108,000 = P0.50 per peso) Expected recovery for each class of claims Partially secured
Note payable and interest
Secured portion P87,000 Unsecured portion (P9,000 × 0.50) 4,500 P91,500 Unsecured priority Administrative expenses P24,000 Wages payable 45,000 69,000 Unsecured nonpriority Accounts payable (P72,000 × 0.50 P36,000 Rent payable (P27,000 × 0.50) 13,500 49,500 Total payments P210,000 Problem III
Allocated to:
Fully secured creditors (316,000)
Partially secured creditors (300,000)
Unsecured creditors with priority (100,000)
Remainder available to general unsecured creditors P559,000 Payment rate to general unsecured creditors
(Including balance due to partially secured creditors)
P559,000 / (P1,165,000 + (P400,000 - P300,000)) 44.2% Realizable value of assets:
Assets pledged to fully secured creditors P635,000 Assets pledged to partially secured creditors 300,000
Free assets 340,000
Total realizable value P1,275,000
Amounts to be paid to:
Fully secured creditors P316,000
Partially secured creditors [P300,000 + (0.442 × P100,000)] 344,200
Unsecured creditors with priority 100,000
General unsecured creditors (0.442 × P1,165,000) 514,800*
Total P1,275,000
*Rounded P130 Problem IV
Free Assets:
Current Assets ... P 35,000 Buildings and Equipment ... 110,000 Total ... P145,000 Liabilities with Priority:
Administrative Expenses ... P 20,000 Salaries Payable (only P3,000 per employee) ... 6,000 Income Taxes ... 8,000 Total ... P 34,000 Free Assets After Payment of Liabilities with Priority
(P145,000 – P34,000) ... P111,000 Unsecured Liabilities
Notes Payable (in excess of value of security) ... P 30,000 Accounts Payable ... 85,000 Bonds Payable ... 70,000 Total ... P185,000 Percentage of Unsecured Liabilities To Be Paid: P111,000/P185,000 = 60 % Payment On Notes Payable:
Value of Security (land) ... P 90,000 60% of Remaining P30,000 ... 18,000 Total Collected by holders ... P108,000
Problem V Free Assets:
Cash ... P30,000 Receivables (30 percent collectible) ... 15,000 Inventory ... 39,000 Land (value in excess of secured note:
P120,000 – P110,000) ... 10,000 Total ... P94,000 Less: Liabilities with priority
Salary payable (below maximum) ... (10,000) Free assets available ... P84,000 Unsecured Liabilities:
Accounts payable ... P90,000 Bonds payable (less secured interest in
building: P300,000 – P180,000) ... 120,000 Unsecured liabilities ... P210,000 Percentage of unsecured liabilities to be paid: P84,000/P210,000 = 40%
Amounts to be paid for:
Salary payable (liability with priority to be paid
in full) ... P10,000 Accounts payable (unsecured—will collect 40%
of debts of P90,000) ... P36,000 Note payable (fully secured by land—will collect
entire balance) ... P110,000 Bonds payable (partially secured—will collect
P180,000 from building and 40 percent of the
remaining P120,000) ... P228,000 Problem VI Class of Creditors Total Creditor’s Claims Total Amounts Expected to be Recovered % of Total Claims Expected to be Recovered Fully secured liabilities
Partially secured liabilities Unsecured liabilities with priority Unsecured liabilities without priority
183,600 54,600 30,810 182,500 183,600 51,720 30,810 116,800 100.0 94.7 100.0 64.0 Problem VII
1. Total estimated proceeds P910,000
Less asset proceeds claimed by secured creditors:
Notes payable and interest (from
proceeds of receivables and inventory) P150,000 Mortgage payable and interest (from
proceeds of land and building) 320,000 470,000 Total available to unsecured claimants. P440,000
Less distributions to unsecured claims with priority:
Wages payable P 10,000
Taxes payable 20,000 30,000
Amount available for unsecured claims P410,000 2. Unsecured portion of notes payable and
interest (P500,000 + P30,000 – P150,000) P380,000
Accounts payable 260,000
Total claims ofunsecured creditors P640,000
Dividend to Unsecured Creditors P410,000 ÷ P640,000 = 64.1%
3. Unsecured portion of notes payable and
Interest P380,000
Dividend on unsecured amount 64.1%
Amount received on unsecured portion P243,580
Proceeds from receivables and inventory 150,000
Total Received P393,580
Dividend to note holders: P393,580 ÷ P530,000 = 74.3% Problem VIII 1. WILBUR CORPORATION STATEMENT OF AFFAIRS DECEMBER 31, 20x4 Assets Book Value Estimated Current Values Estimated Amount Available to Unsecured Claims Estimated Gain (Loss) on Realization (1) Assets pledged with fully secured
creditors:
P 40,000 Accounts receivable (net) P 40,000 Less: 10% note payable and
interest
38,500 P 1,500
50,000 Land P 65,000 P 15,000
110,000 Plant and equipment (net) 100,000 (10,000)
P165,000
Less: Mortgages payable and
interest (157,500) 7,500
(2) Assets pledged with partially secured creditors:
20,000 Marketable securities P 16,000 (4,000)
Less: 10% note payable and
interest (20,800)
35,000 Inventory P 32,000 (3,000)
(3) Free assets:
4,000 Cash P 4,000 4,000
35,000 Accounts receivable (net) 35,000 35,000
55,000 Inventory 50,000 50,000 (5,000)
6,000 Prepaid insurance 1,000 1,000 (5,000)
140,000 Plant and equipment (net) 60,000 60,000 (80,000)
48,000 Franchises 15,000 15,000 (33,000)
Estimated amount available P 174,000
Less: Creditors with priority (43,000)
Net available to unsecured creditors P 131,000
Estimated deficiency 45,000
P 543,000 (P 125,000)
Total unsecured debt P 176,000
2. Percentage to unsecured creditors: P131,000/P176,000 = 74.43% Problem IX
Smith Company
Statement of Realization and Liquidation Assets
Assets to be realized Assets Realized
Old Receivebles, net P 50,000 Old Receivbles P 28,000 Marketable Securities 20,000 New Receivbles 65,000 Old Inventory 72,000 Marketable Securities 15,000 Depreciable Assets, net 120,000 Sales of Inventory 100,000
Assets Acquired Assets Not Realized
New Receivables 100,000 Old Receivables, net 22,000 New Receivables, net 35,000 Depreciable Assets 96,000 Supplementary Items
Supplementary Charges Supplementary Credits
Old Current Payables P 31,000 Net Loss P 7,000 Liabilities
Liabilities Liquidated Liabilities to be Liquidated
Old Current Payables P 31,000 Old Current Payables P 65,000 Liabilities Not Liquidated Liabilities Incurred
Old Current Payables P 34,000 ________ P433,000 P 433,000
Problem X
Mallory Corporation
Statement of Realization and Liquidation For the Three Months Ended July 31, 20x5
Assets
Assets Cash Non-Cash
Beginning balances assigned 5/1/x5 P 4,000 P720,000
Cash Receipts:
Collection of Accounts Receivable 60,000 (70,000)
Sale of inventory 170,000 (200,000)
Sale of land and building 20,000 (340,000)
Sale of machinery 70,000 (100,000)
Cash Disbursements:
Payment of salaries payable (60,000)
Partial payment of accounts pay. (170,000)
Partial payment of bank loan (70,000)
Ending balance P24,000 P10,000
Liabilities Unsecured
Fully Partially With Without Owner's Assets Secured Secured Priority Priority Equity Beginning balances assigned
5/1/X5 P240,000 P270,000 P94,000 P 0 P120,000 Cash Receipts:
Collection of Accounts
Receivable (10,000)
Sale of inventory (30,000)
Sale of land and building (240,000) (80,000)
Sale of machinery (30,000)
Cash Disbursements:
Payment of salaries payable (60,000) Partial payment of accounts
pay (180,000) 10,000
Partial payment of bank loan ________ (90,000) ________ 20,000 ________ Ending balance P 0
P P 0 0 P34,000 P30,000 P (30,000) Multiple Choice Problems
1. d – since there is parent and subsidiary relationship, any intercompany accounts are eliminated from consolidated point of view.
2. a - [P90,000 + P36,000 + P10,000 – P45,000 = P91,000 total estimated amount available; P91,000 – (P4,500 + P10,000) = P76,500 estimated amount available for unsecured, non-priority creditors; P76,500 P90,000 = 0.85]
3. c – it is a partially secured liability
4. d – [(P1,110,000 – P780,000) + P960,000] – P210,000 = P1,080,000 5. b – P25,000 + [.30 x (P75,000 – P25,000)] = P40,000
6. d – (P555,000 – P390,000) + P480,000 = P645,000 – P105,000 = P540,000 7. b – P30,000 + [.30 x (P90,000 – P30,000)] = P48,000
9. d 10. c – P60,000 + [(P120,000 + P6,000) – (P30,000 + P35,000) = P121,000 11. b - P20,000 + P80,000 + [P170,000 – (P150,000 + P7,000)] = P113,000 – (P10,000 + P10,000) = P93,000 12. c – P93,000/P121,000 = 77% rounded. 13. a
Net Free Assets:
(P700,000 – P300,000) + P70,000 + P230,000 = P700,000 – P140,000 = P560,000 Total Unsecured Creditors without priority:
(P400,000 – P300,000) + P600,000 = P700,000
14. c - Pension P10,000 + Salaries P35,000 (= P10,600 + P10,950 + P10,950 + P2,500) + Taxes P80,000 + Liq. expenses P40,000 = P165,000.
15. c
Statement of Realization and Liquidation
Assets to be Realized…………. P 1,375,000 Assets Realized………..P 1,200,000 Assets Acquired……….. 750,000 Assets Not Realized……… 1,375,000 Liabilities Liquidated…………. 1,875,000 Liabilities to be Liquidated…. 2,250,000 Liabilities Not Liquidated……. 1,700,000 Liabilities Assumed………….. 1,625,000 Supplementary charges/ Supplementary credits……… 2,800,000 debits……… 3,125,000
P 8,825,000 P 9,250,000 Net Gain……….. P 425,000 16. No requirement
17. c
Total Liabilities (refer to Liabilities not liquidated–No. 14)……… P1,700,000 +: Stockholders’ Equity (P1,500,000 – P500,000)……… 1,000,000 Total LSHE = Total Assets……… P 2,700,000 -: Noncash assets (refer to Assets not realized-No. 14)……….……… 1,375,000 Cash balance, ending………P1,325,000 18. P440,000
Total Free Assets: Fully secured:
Land and building: P650,000 – (P300,000 + P20,000) = P 330,000 Free assets:
Cash 10,000
Equipment 100,000 P440,000
Or,
Total estimated proceeds P910,000
Less asset proceeds claimed by secured creditors:
Notes payable and interest (from
proceeds of receivables and inventory) P150,000 Mortgage payable and interest (from
proceeds of land and building) 320,000 470,000 Total available to unsecured claimants/total free P440,000 19. P410,000
Total available to unsecured claimants/total free P440,000 Less distributions to unsecured claims
with priority:
Wages payable P 10,000
Taxes payable 20,000 30,000
Amount available for unsecured
claims/net free assets P410,000
20. P640,000 = P260,000 + [(P50,000 + P100,000) – (P500,000 + 30,000), or Unsecured portion of notes payable and
interest (P500,000 + P30,000 – P150,000) P380,000
Accounts payable 260,000
Total claims of unsecured creditors P640,000
21. 64.1%
Dividend to unsecured creditors P410,000 ÷ P640,000 = 64.1% 22. P320,000 = P300,000 + P20,000 23. P393,580
Unsecured portion of notes payable and
interest P380,000
Dividend on unsecured amount x 64.1%
Amount received on unsecured portion P243,580 Proceeds from receivables and inventory 150,000
Total Received P393,580
Dividend to note holders: P393,580 ÷ P530,000 = 74.3% 24. P30,000
25. P166,666 = P260,000 x 64.1
26. P910,247 = P320,000 + P393,580 + P30,000 + P166,666 (discrepancy of P247 due to rounding-off)
27. P230,000
Net free assets (No. 19) P410,000
Less: Unsecured creditors without priority (No. 20) 640,000 P230,000 28. P340,000 = P910,000 – P1,250,000
29. P340,000, same with No. 28, since there are no unrecorded expenses liabilities)
30. P60,675 – you may the same procedure in Nos. 18 to 29 to solve this problem, the following is the formal presentation of statement of affairs
Estimated Net Realizable Value Estimated Amt Avail for Unsecured Creditors Estimated Gain or (Loss)on Liquidation
Book
Value Assets
Assets pledged with fully secured creditors:
98,500 Land and Bldg 92,800 22,200 (5,700) 5,800 Investment in Calandir 15,000 4,625 9,200
Total 107,800 Assets pledged with partially
secured creditors: 41,000 Inventory 20,000 (21,000) 43,000 Equipment 8,000 (35,000) Free Assets: 1,850 Cash 1,850 1,850 0 21,200 Accounts Rec 17,000 17,000 (4,200) 15,000 Note Rec 15,000 15,000 0
Estimated Amount Avail for unsecured creditors
with and without priority 60,675
Less unsecured creditors with priority (3,775) Estimated amounts for unsecured creditors
without priority (Net Free Assets):
Net Realizable Amount Avail 56,900
_______ Deficiency _______ 15,725 _______
226,350 169,650 72,625 (56,700)
Estimated Estimated Unsecured Amount
Book Liabilities Secured With Without
Value and Owners Equity Amount Priority Priority Fully Secured Creditors:
600 Accrued Mtg Interest 600 70,000 Mortgage Payable 70,000 375 Accrued N/P Interest 375 10,000 Note Payable 10,000 Total 80,975 Partially Secured Creditors: 50,000 Accounts Payable 28,000 22,000
Unsecured Creditors with Priority:
3,775 Accrued Payroll 3,775
Unsecured creditors without Priority:
40,625 Accounts Payable 40,625
10,000 Other Accrued Liabilities _______ 10,000
185,375 Totals 108,975 3,775 72,625
40,975 Owner Equity 226,350
31. P56,900 – refer to No. 30 for computation 32. P72,625 – refer to No. for computation
33. Dividend - P56,900/P72,625 = P.78 – refer to No. 30 for further computation 34. P80,975 – refer to No. 30 for computation
35. P45,160 = P28,000 + (P22,000 x 78%) 36. P3,775
37. P39,487.50 = 78% x (P40,625 + P10,000) 38. P169,397.50
No. 35……….. 45,160 No. 36……….. 3,775 No. 37……….. 39,487.50
P169,397.50 (discrepancy around P250 plus due to rounding-off) 39. P15,725 – refer to No. 30 or P56,700, estimated net loss – P40,975, owners’ equity 40. P56,700 – refer to No. 30 or P169,650 – P226,350
41. P56,700 (same with No. 40 since there are no unrecorded expenses liabilities) 42. P22,475
Liabilities
Unsecured
Assets Fully Partial With Without Owners' Cash Noncash Secured Secured Priority Priority Equity 6/1/x5 Balances: 1,850 224,500 80,975 50,000 3,775 50,625 40,975 Cash Receipts: Securities Sale 16,000 (5,800) 10,200 N/R Collected 15,000 (15,000) 0 Equipment Sale 7,000 (43,000) (36,000) Inventory Sale 22,000 (41,000) (19,000) Cash Disbursements: Bank Loan (10,375) (10,375) Part Pyt-A/P (29,000) --- --- (50,000) --- 21,000 --- 6/30 Balance 22,475 119,700 70,600 0 3,775 71,625 (3,825) 43. P119,700 – refer to No. 42 44. P70,600 – refer to No. 42 45. None – refer to No. 42 46. P3,775 – refer to No. 42 47. P71,625 – refer to No. 42
48. (P3,825) deficit – refer to No. 42 49. P150,900 Book Value Assets Estimated Net Realizable Value Estimated Amount Available for Unsecured Creditor Estimated Gain or (Loss) on Liquidation Assets pledged with fully secured creditors:
57,000 Accounts receivable (net) 45,000 12,600 (12,000) 174,000 Land, plant and equipment (net) 150,000 77,400 (24,000)
Total 195,000
Free assets:
6,000 Notes receivable 6,000 6,000 0
900 Accrued interest receivable 900 900 0 90,000 Inventories (90,000 x 60%) 54,000 54,000 (36,000)
Estimated amount available for unsecured creditors with and
without priority 150,900
Less unsecured creditors with priority (26,900) Estimated amounts for unsecured
Net realizable amount available 124,000 Deficiency 26,000 327,900 Totals 255,900 150,000 (72,000) Estimated Secured Amount Estimated Unsecured Amount With Priority Without Priority Book
Value Liabilities and Owners' Equity Fully secured creditors:
3,600 Accrued interest 3,600 69,000 Note payable 69,000 2,400 Accrued interest 2,400
30,000 Note payable 30,000
Total 105,000
Unsecured creditors with priority:
24,900 Wages payable 24,900
0
Administration fees – accountant’s
fee 2,000
Unsecured creditors without priority:
0 Accrued interest 0
18,000 Cash overdraft 18,000
6,000 Notes payable 6,000
126,000 Accounts payable --- --- 126,000 279,900 Totals 105,000 26,900 150,000 48,000 Owners' equity--see Note A
327,900
Note A: Includes the effect of the P2,000 professional fee. 50. P124,000 – refer to No. 49 51. P150,000– 52. 82.67% = P124,000/P150,000 53. P105,000 54. None 55. P26,900 56. P124,005 = P150,000 x 82.67% 57. P255,900 = P72,000 + P26,900 + P124,005 (discrepancy of P5) 58. P26,000 = (P72,000 + P2,000 unrecorded ) – P48,000 or P150,000 – P124,000 59. P72,000 – refer to No. 49
60. P74,000 = P72,000, loss of realization of assets + P2,000 unrecorded expenses Quiz - VI
1. P96,000
... Claims of partially secured creditors ... P 120,000 ... Current value of assets pledged with these creditors ... (80,000) ... Deficiency that is unsecured ... P 40,000 ... Claims of other unsecured creditors ... 360,000 ... Total unsecured creditors claims ... P 400,000
... Amount available to unsecured creditors: ... Excess left over after paying fully secured creditors ... (P195,000 – P150,000) ... P 45,000 ... Current value of free assets (net of P45,000 to ... creditors with priority) ... 115,000 ... Amount available to unsecured creditors ... P160,000
Settlement to unsecured claims per dollar (P160,000/P400,000) P .40 Total distribution to partially secured creditors:
Current value of assets pledged P 80,000 Deficiency of P40,000 × P.40 16,000
P 96,000 2. P144,000 = P360,000 x 40% 3. P56,000
... Claims of partially secured creditors ... P 90,000 ... Current value of assets pledged with these creditors ... (50,000) ... Deficiency that is unsecured ... P 40,000 ... Claims of other unsecured creditors ... 200,000 ... Total unsecured creditors claims P 240,000
... Amount available to unsecured creditors: ... Excess left over after paying fully secured creditors ... (P300,000 – P250,000) ... P 50,000 ... Current value of free assets (net of P60,000 to ... creditors with priority) ... (14,000) ... Amount available to unsecured creditors ... P 36,000
Settlement to unsecured claims per peso (P36,000/P240,000) P .15 Total distribution to partially secured creditors:
Current value of assets pledged P 50,000 Deficiency of P40,000 × P.15 6,000
P 56,000 4. P30,000 = P200,000 x 15%
6. P96,000 = Free assets P220,000 - priority claims P100,000 = P120,000
P120,000/P300,000 unsecured = payment of 40% on unsecured peso 40% x P240,000
A/P = P96,000
7. P474,000 = Land and building sold for P450,000 leaves P60,000 unsecured still owing. 40% x P60,000 = P24,000
8. P295,000 = P200,000 + P95,000
9. P42,950 - (P10,950 + P2,000 + P20,000 + P10,000)
10. P76,050 - Excess of salaries, P1,050 + notes pay in excess of security P25,000 + accounts pay P50,000
11. P163,800 Free assets:
Other assets P104,000
Excess from assets pledged with secured
(P150,800 – P91,000) 59,800 P163,800 12. P109,200
Total free assets P163,800
Less: Liabilities with priority 54,600 P109,200 13. P364,000
Unsecured creditors:
Excess of partially secured liabilities over
Pledged assets (P169,000 – P65,000) P104,000
Unsecured creditors 260,000
P364,000 14. P96,200
Payment of partially secured debt:
Value of pledged assets P 65,000 30%* of remaining P104,000 31,200 P 96,200 *P109,200/P364,000 = 30%
15. P78,000
Cash P 65,000
Excess of pledged with secured liabilities
(P117,000 – P104,000) 13,000 P 78,000 16. P52,000
Free assets after of liabilities with priority:
Total free assets P 78,000
Less: Liabilities with priority 26,000 P 52,000 17. P260,000
Unsecured creditors:
Excess of partially secured liabilities over
pledged assets (P195,000 – P169,000) P 26,000
Accounts payable 234,000
18. P174,200
Payment on bond:
Value of pledged assets P 169,000
20%* of remaining P26,000 5,200 P 174,200 Free after priority: P52,000/P260,000 = 20%
19. P247,000
Free assets P390,000
Excess from assets pledged with fully secured
(P260,000 – P195,000) 65,000
Amount available P455,000
Unsecured liabilities with priority ( 208,000) Net free assets / available for unsecured P247,000 20. P32,000
Cash 120,000
Mortgage payable, paid in full ( 60,000 )
60,000
Note payable to bank, secured portion ( 30,000 )
30,000 Priority claims (P16,000 of administrative costs + P2,000 of customer deposits + P4,000 property tax) ( 22,000 ) Available for unsecured nonpriority claims 8,000
Unsecured, nonpriority claims:
Unsecured portion of note payable to bank 10,000
Accounts payable 30,000
Total unsecured, nonpriority claims 40,000
P8,000 cash/P40,000 claims = P.20 on the dollar
Amount paid to bank:
P30,000 for secured portion + (P10,000 x .20) for unsecured
portion = 32,000
21. P15,400
Mortgage note receivable 35,000
Less: Portion secured by equipment ( 7,000 )
Unsecured portion 28,000
Estimated recovery on secured portion 7,000
Estimated recovery on unsecured portion
(P28,000 x P.30) = 8,400
Recovery on mortgage note receivable 15,400
22.
Mortgage note receivable 80,000
Less: Portion secured by marketable securities ( 60,000 )
Unsecured portion 20,000
Estimated recovery on secured portion 60,000
Estimated recovery on unsecured portion
Recovery on mortgage note receivable 65,000
23. P30,000
Book value of assets P700,000
Net realizable of assets 370,000
P330,000 Less stockholders' equity
(P700,000 – P400,000) 300,000
Deficiency P 30,000
24. P.75 Dividend = P370,000 – P250,000 – P30,000 / P400,000 – P250,000 – P30,000 25. P8,500 = P7,000 + [(P9,000 – P7,000) x .75]
26. P410,000
Total estimated proceeds P910,000
Less asset proceeds claimed by secured creditors:
Notes payable and interest (from
proceeds of receivables and inventory) P150,000 Mortgage payable and interest (from
proceeds of land and building) 320,000 470,000 Total available to unsecured claimants. P440,000 Less distributions to unsecured claims
with priority:
Wages payable P 10,000
Taxes payable 20,000 30,000
Amount available for unsecured creditors P410,000 27. 64.10%
Unsecured portion of notes payable and
interest (P500,000 + P30,000 – P150,000) P380,000
Accounts payable 260,000
Total claims of unsecured creditors P640,000
Dividend to unsecured creditors: P410,000 ÷ P640,000 = 64.1%
28. Unsecured portion of notes payable and
Interest P380,000
Dividend on unsecured amount x 64.1%
Amount received on unsecured portion P243,580 Proceeds from receivables and inventory 150,000
Total Received P393,580
Dividend to note holders: P393,580 ÷ P530,000 = 74.3% THEORIES
1. debtor 2. P5,000
3. inability to pay debts as they mature 4. a. administrative costs
b. certain postfiling ―gap‖ claims in involuntary filings c. wages, salaries, and commissions
d. employee benefit plans e. deposits by individuals f. taxes
5. infrequent
6. two-thirds, more than one-half 7. fraudulent, preferential
8. realization and liquidation
9. False 14. False 19. False 24.
