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 & EQUITY Cash P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable – PNB Notes Payable – suppliers Accrued wages P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Accounts Receivable Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net Accrued taxes Mortgage Bonds Payable Common stock – P100 par Retained Earnings Total Liabilities & Equity Total Assets P518,800 Additional information: a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good notes 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 equipment, net of disposal cost is P18,000. e. Estimated legal and accounting fees for the liquidation are P2,000. f. Unrecorded interest on notes payable to supplier amounts to P1,000. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority
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 & EQUITY Cash P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable – PNB Notes Payable – suppliers Accrued wages P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Accounts Receivable Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net Accrued taxes Mortgage Bonds Payable Common stock – P100 par Retained Earnings Total Liabilities & Equity Total Assets P518,800 Additional information: a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good notes 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 equipment, net of disposal cost is P18,000. e. Estimated legal and accounting fees for the liquidation are P2,000. f. Unrecorded interest on notes payable to supplier amounts to P1,000. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 21QTD
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