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 Accounts Receivable P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable - PNB Notes Payable – suppliers Accrued wages Accrued taxes P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net 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 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors
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 Accounts Receivable P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable - PNB Notes Payable – suppliers Accrued wages Accrued taxes P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net 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 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 5EA: Millennium Associates records bad debt using the allowance, income statement method. They recorded...
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text: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
Accounts Receivable
P5,400
78,700
37,000
175,700
1,900
122,500
97,600
Accounts Payable
Notes Payable – PNB
Notes Payable – suppliers
Accrued wages
Accrued taxes
P105,000
30,000
102,500
3,700
9,300
180,000
150,000
(61,700)
P518,800
Note Receivable
Inventory
Prepaid Expenses
Land and Building
Equipment, net
Mortgage Bonds Payable
Common stock – P100 par
Retained Earnings
Total Liabilities & Equity
Total Assets
P518,800
Additional information:
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.
a.
b. Inventories are expected to bring in P90,200 when sold under bankruptcy conditions.
Land and buildings have an appraised value of P190,000. They serve as security on the bonds.
C.
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
4. Unsecured liabilities without priority
5. Estimated recovery percentage
6. Net gain (loss) on realization
Estimated deficiency
7.
8. Net income (loss) on realization and liquidation
9. Amount paid to partially secured creditors
10. Amount paid to unsecured creditors without priority
11. Total estimated payment to creditors
12. Total payment to unsecured creditors
Transcribed Image Text:The following data were taken from the statement of realization and liquidation of Bagsak Corporation for the
three-month period ended December 31:
Assets to be realized
P120,000
P220,000 Liabilities assumed
240,000 Liabilities liquidated
280,000 Liabilities not liquidated
100,000 Supplementary credits
360,000 Supplementary charges
Assets acquired
Assets Realized
Assets not realized
Liabilities to be liquidated
240,000
300,000
340,000
312,000
Based on the above data, compute the following:
13. Net income (loss) for the period
14. Gain (loss) on realization
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