Miner Company is being forced into bankruptcy. The Company's creditors and stockholders haverequested an estimate of the results of liquidation of the Company. Miner's trial balance follows:AccountsCashDebitCreditP6,00063,000Accounts receivableAllowance for bad debtsP2,000Notes receivable50,0001,200Accrued interest on notes receivableInventoryBuildingsAccumulated depreciation-BuildingsEquipmentAccumulated depreciation-EquipmentPrepaid insurance60,000182,00063,00014,6001,4001,100Goodwill8,500Accrued wages6,0002,400170,00080,0001,600Taxes payableAccounts payable and other liabilitiesNotes payableAccrued interest payableCommon stock110,000Retained earnings (deficit)50,000TotalP436,400 P436,400The assets are expected to bring cash on conversion in the following amountsAccounts receivableP50,00040,800Notes receivable including P1,000 accruedinterestBuilding75,000Prepaid insurance400 The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expensesamounting to P1,000. Fair market value of the equipment amounted to P4,200.The notes receivable are pledged as a security on a note payable of P40,000. A note payable of P20,000 issecured by a lien on the building, and the equipment is pledged as security on a note payable of P10,000.One-half of the interest payable relates to P40,000 note payable; the other half of the interest payablerelates to the P20,000 note payable. There is no accrued interest on the other notes payable.payable and other liabilities include debts, taxes and assessmentsNationalGovernment amounting to P10,000.The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, whichwill be incurred in connection with the liquidation.Requirement: Compute for the payment to each class of creditor.

Liquidation Process In the liquidation process in a company first to taken up whole assets which can…

Accounts payable and other liabilities include debts, taxes and assessments due to the National Government amounting to P10,000. The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation. Requirement: Compute for the payment to each class of creditor.

Accounts payable and other liabilities include debts, taxes and assessments due to the National Government amounting to P10,000. The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation. Requirement: Compute for the payment to each class of creditor.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 44P

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Miner Company is being forced into bankruptcy. The Company’s creditors and stockholders have requested an estimate of the results of liquidation of the Company. Miner’s trial balance follows: Accounts Debit Credit Cash P6,000 Accounts receivable 63,000 Allowance for bad debts P2,000 Notes receivable 50,000 Accrued interest on notes receivable 1,200 Inventory 60,000 Buildings 182,000 Accumulated depreciation-Buildings 63,000 Equipment 14,600 Accumulated depreciation-Equipment 1,400 Prepaid insurance 1,100 Goodwill 8,500 Accrued wages 6,000 Taxes payable 2,400 Accounts payable and other liabilities 170,000 Notes payable 80,000 Accrued interest payable 1,600 Common stock 110,000 Retained earnings (deficit) 50,000 Total P436,400 P436,400 The assets are expected to bring cash on…
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