A trustee has been appointed for Pace Incorporated, which is being liquidated under Chapter 7 of the Bankruptcy Code. The following occurred after the assets were transferred to the trustee: 1. Sales on account by the trustee were $76,300. Cost of goods sold were $61,000, consisting of all inventory transferred from Pace. 2. The trustee sold all $13,600 worth of marketable securities for $9,800. 3. Receivables collected by the trustee: old: New: $19,100 of the $39,500 transferred $45,600 4. Depreciation of $16,000 on the plant assets of $97,000 transferred from Pace were recorded. 5. Disbursements by the trustee: Old current payables: Trustee's expenses: $23,000 of the $49,300 transferred $5,800 Required: Prepare a statement of realization and liquidation according to the traditional approach illustrated in the chapter.

A trustee has been appointed for Pace Incorporated, which is being liquidated under Chapter 7 of the Bankruptcy Code. The following occurred after the assets were transferred to the trustee: 1. Sales on account by the trustee were $76,300. Cost of goods sold were $61,000, consisting of all inventory transferred from Pace. 2. The trustee sold all $13,600 worth of marketable securities for $9,800. 3. Receivables collected by the trustee: old: New: $19,100 of the $39,500 transferred $45,600 4. Depreciation of $16,000 on the plant assets of $97,000 transferred from Pace were recorded. 5. Disbursements by the trustee: Old current payables: Trustee's expenses: $23,000 of the $49,300 transferred $5,800 Required: Prepare a statement of realization and liquidation according to the traditional approach illustrated in the chapter.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 6P

See similar textbooks

Similar questions

Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $6,000 and accounts receivable of $25,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $8,000 each. Plots C and D cost the company $20,000 and $25,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $15,000 each. Presently, the land can be sold for the following:Another $25,000 note payable is unsecured. Accounts payable at this time total $32,000. Of this amount, $12,000 is salary owed to the company’s workers. No employee is due more than $3,400.The company expects to collect $12,000 from the accounts receivable if liquidation becomes necessary. Administrative expenses required for liquidation are anticipated to be $16,000.a. Prepare a statement of financial affairs for…
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $6,000 and accounts receivable of $25,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $8,000 each. Plots C and D cost the company $20,000 and $25,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $15,000 each. Presently, the land can be sold for the following: Plot A . . . . . . . . . . . . . . . . . .. $16,000Plot B . . . . . . . . . . . . . . . . . .. $11,000Plot C . . . . . . . . . . . . . . . . . .. $14,000Plot D . . . . . . . . . . . . . . . . . . $27,000 Another $25,000 note payable is unsecured. Accounts payable at this time total $32,000. Of this amount, $12,000 is salary owed to the company’s workers. No employee is due more than $3,400.The company expects to…
Borden Corporation is undergoing Chapter 7 liquidation . Currently it has cash of $ 130,000 , inventory with a carrying value of $ 650,000 and equipment with a carrying value of $ 775,000 . It owes $ 2,100,000 to unsecured creditors . During the current month , the trustee sells Borden's entire inventory for $ 290,000 , sells equipment with a carrying value of $ 100,000 for $ 120,000 , accrues and pays administrative expenses of $ 5,000 , and pays creditors $ 400,000 On the statement of estate equity at the end of the month , the estate equity balance is Select one : a . $ ( 890,000 ) B. $ ( 1,290,000 ) C. $ ( 930,000 ) d . 905,000 )
Deere, Inc. will be liquidated under Chapter 7 of the Bankruptcy Act. Its current balance sheet is shown below. Fixed assets will be sold for $4,000,000 and current assets will be sold for $3,000,000. All fixed assets are pledged as collateral for all mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $750,000. Before Before Default Balance Sheet Default Current Assets 5,000,000 Accounts payable 1,000,000 Net fixed assets 7,000,000 Accrued taxes 50,000 Accrued wages 85,000 Notes payable 2,000,000 Total current liabilities 3,135,000 First-mortgage bonds 2,000,000 Second-mortgage bonds 3,000,000 Subordinated debentures 5,000,000 Common stock 300,000 Retained earnings (1,435,000) Total assets 12,000,000 Total claims 12,000,000 a. How much will SHs receive? b. How much will mortgage bondholders receive? c. How much will…
Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows: Estimated Realizable Book Value ValueCash $ 10,000 $ 10,000Accounts receivable-net 60,000 50,000Inventory 110,000 65,000Land 20,000 35,000Building 200,000 126,000Goodwill…
Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows: Estimated Realizable Book Value ValueCash $ 10,000 $ 10,000Accounts receivable-net 60,000 50,000Inventory 110,000 65,000Land 20,000 35,000Building 200,000 126,000Goodwill…
Prior to filing a voluntary Chapter 7 bankruptcy petition, Haynes Company pays a supplier $13,000 to satisfy an unsecured claim. Haynes was insolvent at the time. Subsequently, the trustee appointed to oversee this liquidation forces the return of the $13,000 by the supplier. Which of the following is true?a. A preference transfer has been voided.b. All transactions just prior to a voluntary bankruptcy proceeding must be nullified.c. The supplier should sue for the return of this money.d. The $13,000 claim becomes a liability with priority.
The Sunshine Company has the following data in connection with its bankruptcy petition with the Securities and Exchange Commission at the end of 2018. Unsecured creditorsP287.500. Liabilities with priority137,500 Secured Liabilities Debt 1, P262,500; value of pledged asset 225,000 Debt 2, P212,500, value of pledged asset 125,000 Debt 3, P150,000, value of pledged asset 175,000' The company also has a number of other assets that are not pledge in any way, The creditors holding Debt 2 want to receive at least P177,50 Required: For how much do these free assets have to be sold so that Debt 2 would receive exactly P177,500. Show your solution
A statement of financial affairs created for an insolvent corporation that is beginning the process of liquidation discloses the following data (assets are shown at net realizable values):a. This company owes $13,000 to an unsecured creditor (without priority). How much money can this creditor expect to collect? b. This company owes $120,000 to a bank on a note payable that is secured by a security interest attached to property with an estimated net realizable value of $90,000. How much money can this bank expect to collect?
Kent Co. filed a voluntary bankruptcy petition on August 15, 2008, and the statement of affairs reflects the following amounts: Assets Book value Estimated Market value Pledged with fully secured creditors P300,000 P370,000 Pledged with partially secured creditors 180,000 120,000 Free Assets 420,000 320,000 Liabilities With priority 70,000 Fully secured 260,000 Partially secured 200,000 Unsecured 540,000 What amount of cash will be available for unsecured creditors?
Bottomless Pit Inc. files a voluntary petition for bankruptcy on May 1, 200X which includes the following assets and liabilities: Carrying Realizable Amount Amount Assets Cash $2,000 $2,000 Accounts receivable 66,000 20,000 Inventory 6,000 3,000 Building 80,000 130,000 Equipment 36,000 10,000 Total Assets $190,000 $165,000 Liabilities Salaries payable $5,000 Taxes payable 10,000 Accounts payable 80,000 Loan payable 115,000 secured by building Liquidation costs payable 5,000 $215,000 Prepare a Statement of Affairs and a Schedule of Estimated Amounts to be Recovered by Creditors as of May 1, 200X. On May 1, 200X the Bankruptcy Court appointed you as trustee to administer the assets…
APA Bank holds a P500,000 note secured by a building owned by ABC company, which has filed for bankruptcy. If the property has book values of P600,000 and a fair market value of P450,000. The amount of secured claim is