Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts.The statement of financial position on that date shows:ASSETSLIABILITIES & EQUITYCashAccounts ReceivableNote ReceivableInventoryPrepaid ExpensesLand and BuildingEquipment, netP5,40078,70037,000175,7001,900122,50097,600Accounts PayableNotes Payable – PNBNotes Payable - suppliersAccruedwagesAccruedtaxesP105,00030,000102,5003,7009,300180,000150,000(61,700)P518,800Mortgage Bonds PayableCommon stock-P100 parRetained EarningsTotal Liabilities & EquityTotal AssetsP518,800Additional information:a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The goodnotes are pledged to PhilippineNational Bank.b. Inventories are expectedto bring in P90,200when soldunder bankruptcyconditions.Landand buildingshave an appraised value of P190,000. They serveas security on the bonds.d. The currentvalue of the equipment, net of disposal costis P18,000.e. Estimated legal and accounting fees for the liquidation are P2,000.c.f.Unrecorded interest on notes payableto supplier amountsto P1,000. Using the above data, compute the following:1. Total free assets2. Net free assets3. Unsecured liabilities with priority4. Unsecured liabilities without priority5. Estimated recovery percentage6. Net gain (loss) on realization7. Estimated deficiency8. Net income (loss) on realization and liquidation9. Amount paid to partially secured creditors10. Amount paid to unsecured creditors without priority11. Total estimated payment to creditors12. Total payment to unsecured creditors

Liquidation refers to winding up of a business. A statement of net affairs is prepared which shows…

Answered: 1. Total free assets 2. Net free assets…

1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11EA: Mirror Mart uses the balance sheet aging method to account for uncollectible debt on receivables....

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Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts.The statement of financial position on that date shows:ASSETS LIABILITIES & EQUITYCash P5,400 Accounts Payable P105,000Accounts Receivable 78,700 Notes Payable – PNB 30,000Note Receivable 37,000 Notes Payable – suppliers 102,500Inventory 175,700 Accrued wages 3,700Prepaid Expenses 1,900 Accrued taxes 9,300Land and Building 122,500 Mortgage Bonds Payable 180,000Equipment, net 97,600 Common stock – P100 par 150,000Retained Earnings (61,700)Total Assets P518,800 Total Liabilities & Equity P518,800Additional information:a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The goodnotes are pledged to Philippine National Bank.b. Inventories are expected to bring in P90,200 when sold under bankruptcy conditions.c. Land and buildings have an appraised value of P190,000. They serve as security on the bonds.d. The current value of the…
At December 31, 2012, Bloomfield company reported Accounts Receivable of $54.000 and Allowance for Doubtful Accounts of $7,500. on January 3, 2013, Bloomfield Company declares bankruptcy and it is determined that the receivable of $5,200 from Austin Co. is not collectible. 1. What is the net realizable value of Accounts Receivable at December 31, 2012? 2. What entry would Bloomfield Company make to write off Austin Co.'s account? 3. What is the net realizable value of Accounts Receivable after the Austin Co.'s account is written off?
Statement of Affalrs and Deficiency Account Miner Company is being forced into bankruptcy. The company's creditors and stockholden have requested an estimate of the results of a liquidation of the cómpany. Miner's trial balgne follows: Debit P 6,000 63,000 Accounts Credit Cash.. Accounts receivable. Allowance for bad debts. Notes Receivable Accrued Interest on Notes Receivable, Inventory. Buildings.. ACcumulated Depreciation-Buildings. Equipment... ACcumulated Depreciation-Equipment. Prepaid insurance.. Goodwill Accrued Wages-with Priority. Taxes Payable-with Priority. Accounts Payable. P 2,000 Y 50,000 9011200 60,000 182,000 63.000 14,600 1,400 1,100 8,500 6,000 2,400
Because of the inability to pay debts, Steven Company has been forced into bankruptcy as of April 30, 2021. The statement of financial position on that date shows: Assets Liabilities P 2,700 Accounts Payable 39,350 Notes Payable - PNB 18,500 Notes Payable - Suppliers 87,850 Accrued Wages 950 Accrued Taxes Cash Accounts Receivable P 52,500 15,000 51,250 1,850 Notes Receivable Inventories Prepaid Expenses Land and Buildings 4,650 61,250 Mortgage Bond Payable 90,000 48,800 Ordinary Share - P100 par Accumulated Profit (Deficit) Equipment 75,000 (30,850) P259,400 P259,400 Accounts receivable of P16,110 and notes receivable of P12,500 are expected to be collectible. The good notes are pledged to Phil. National Bank. Inventories are expected to bring in P45,100 when sold under bankruptcy conditions. Land and building have an appraised value of P95,000. They serve as security on the bonds. The current value of the equipment, net of disposal cost is P9,000. The expected recovery percentage…
Down Dog Corporation filed a petition for bankruptcy on June 30, 2014. Data relevant to its financial position as of this date are: Cash Accounts receivable-net Inventories Equipment-net Total assets Accounts payable Rent payable Wages payable Note payable plus accrued interest Capital stock Retained earnings (deficit) Total liabilities and equity Requirements: Book Value P3,000 72,000 60,000 165,000 P300,000 P72,000 21,000 45,000 96,000 180,000 (120.000) P300.000 Estimated Net Realizable Values P3,000 48,000 72,000 87,000 P210,000 1. Prepare a statement of affairs assuming that the note payable and interest are secured by a mortgage on the equipment. 2. Estimate the amount that will be paid to each class of claims if priority liquidation expenses, including trustee fees, are P24,000 and estimated net realizable values are realized.
The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The statement of financial position on that date shows: ASSETS:Cash P 2,700Accounts Receivable 39,350Notes Receivable 18,500 Inventories 87,850Prepaid Expenses 950 Land and Buildings 61,250Equipment 48,800 Retained Earnings (30,850)Total ? LIABILITIES AND EQUITY: Accounts Payable P52,500 Notes Payable - PNB 15,000 Notes Payable - Suppliers 51,250 Accrued Wages 1,850 Accrued Taxes 4,650 Mortgage Bonds Payable 90,000 Common Stock - P 100 par 75,000 Total ? Additional Information:▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be…
Because of its inability to pay its debts, the KDC Manufacturing Company has been forced into bankruptcy as of June 30, 2021. The Statement of Financial Position on that date shows. Cash Accounts Receivable Notes Receivable Inventories Prepaid Expenses Land and Buildings Equipment ASSETS TOTAL c. 48% d. 50% 5,665 Accounts Payable 39,350 Notes Payable - BPI 18,500 Notes Payable - Suppliers 87,850 Accrued Wages 950 Accrued Taxes 61,250 Mortgage Bond Payable LIABILITIES and EQUITY 48,800 Common Stock - P100 par a. 4,355 b. 4,550 c. 3,120 d. 6,500 P262,365 TOTAL 15. The estimated loss on asset disposition is a. 29,240 b. 112,740 c. 111,790 d. 82,550 16. What is the estimated gain on asset disposition? a. 33,750 b. 41,000 c. 34,700 d. 0 17. The expected recovery percentage is: a. 67% b. 70% Retained Earnings 52,500 15,000 51,250 Additional Information: Only P16,110 of Accounts Receivable and P12,500 of Notes Receivable are expected to be collectible. The good notes are pledged to Bank of…
The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The statement of financial position on that date shows: ASSETS:Cash P 2,700Accounts Receivable 39,350Notes Receivable 18,500 Inventories 87,850Prepaid Expenses 950 Land and Buildings 61,250Equipment 48,800 Retained Earnings (30,850)Total ? LIABILITIES AND EQUITY: Accounts Payable P52,500 Notes Payable - PNB 15,000 Notes Payable - Suppliers 51,250 Accrued Wages 1,850 Accrued Taxes 4,650 Mortgage Bonds Payable 90,000 Common Stock - P 100 par 75,000 Total ? Additional Information:▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be…
The annual report for Fabeck Finishing Corporation contained the following information: (in millions) Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net 2021 $673 32 $641 Assume that accounts receivable write-offs amounted to $13 during 2021 and $3 during 2020, and that Fabeck Finishing did not record any recoveries. Bad Debt Expense 2020 $735 31 $704 Required: Determine the Bad Debt Expense for 2021 based on the above facts. (Enter your answer in millions.) million
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Using direct method, ZARA company decided on December 2, 2019 to write-off 370$ that owned to HH company Ltd. The journal entry to record this transaction is O a. Bad debt expense 370 Account receivable 370 O b. Bad debt expense 370 Cash 370 Oc Bad debt expense 370 C. Allowance for doubtful account 370 O d. Cash370 Bad debt expense 370
At December 31, 2018, Wynne Company reported Accounts Receivable of $45,000 and Allowance for Doubtful Accounts of $3,500. On January 7, 2019, Brown Enterprises declares bankruptcy and it is determined that the receivable of $1,200 from Brown is not collectible. What is the cash realializable value of accounts receivab;le after the Brown account is written off?