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Mallory Corporation is being liquidated. On May 1, 20x5, you are appointed the court's trustee for the liquidation. The book values for assets and liabilities, on May 1, 20x5, were as follows: Cash Accounts receivable (net) Inventories Land and building (net) Machinery (net) Accounts payable Salaries payable Income tax payable Trustee's fee payable Mortgage payable Bank loan payable P 4,000 80,000 200,000 340,000 100,000 180,000 60,000 14,000 20,000 240,000 90,000 During May through July of 20x5, the following occurred: the mortgage is secured by the land and building, and the bank loan is secured by the machinery. The accounts payable are secured by the inventories; three-fourths the accounts receivable were collected. Of the remaining accounts, P10,000 are believed to be uncollectible; the inventories were sold for P170,000; the land and building were sold for P20,000 and the assumption of the mortgage. The machinery sold for P70,000, and the proceeds were remitted to the bank; Salaries payable and P170,000 of the accounts payable were paid. Requirement: 1. Prepare the Statement of Liquidation and Realization using the T-account format. 2. Determine the following ending balances at the end of July 20x5: a. Cash b. Non-cash Asset c. Fully-secured creditors d. Partially-secured creditors e. Unsecured Creditors with Priority f. Unsecured Creditors without Priority 9. Capital Deficit

Mallory Corporation is being liquidated. On May 1, 20x5, you are appointed the court's trustee for the liquidation. The book values for assets and liabilities, on May 1, 20x5, were as follows: Cash Accounts receivable (net) Inventories Land and building (net) Machinery (net) Accounts payable Salaries payable Income tax payable Trustee's fee payable Mortgage payable Bank loan payable P 4,000 80,000 200,000 340,000 100,000 180,000 60,000 14,000 20,000 240,000 90,000 During May through July of 20x5, the following occurred: the mortgage is secured by the land and building, and the bank loan is secured by the machinery. The accounts payable are secured by the inventories; three-fourths the accounts receivable were collected. Of the remaining accounts, P10,000 are believed to be uncollectible; the inventories were sold for P170,000; the land and building were sold for P20,000 and the assumption of the mortgage. The machinery sold for P70,000, and the proceeds were remitted to the bank; Salaries payable and P170,000 of the accounts payable were paid. Requirement: 1. Prepare the Statement of Liquidation and Realization using the T-account format. 2. Determine the following ending balances at the end of July 20x5: a. Cash b. Non-cash Asset c. Fully-secured creditors d. Partially-secured creditors e. Unsecured Creditors with Priority f. Unsecured Creditors without Priority 9. Capital Deficit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mallory Corporation is being liquidated. On May 1, 20x5, you are appointed the court's trustee for the liquidation. The book values for assets and liabilities, on May 1, 20x5, were as follows: Cash Accounts receivable (net) Inventories Land and building (net) Machinery (net) Accounts payable Salaries payable Income tax payable Trustee's fee payable Mortgage payable Bank loan payable P 4,000 80,000 200,000 340,000 100,000 180,000 60,000 14,000 20,000 240,000 90,000 During May through July of 20x5, the following occurred: the mortgage is secured by the land and building, and the bank loan is secured by the machinery. The accounts payable are secured by the inventories; three-fourths of the accounts receivable were collected. Of the remaining accounts, P10,000 are believed to be uncollectible; the inventories were sold for P170,000; the land and building were sold for P20,000 and the assumption of the mortgage. The machinery sold for P70,000, and the proceeds were remitted to the bank: Salaries payable and P170,000 of the accounts payable were paid. Requirement: 1. Prepare the Statement of Liquidation and Realization using the T-account format. 2. Determine the following ending balances at the end of July 20x5: a. Cash b. Non-cash Asset c. Fully-secured creditors d. Partially-secured creditors e. Unsecured Creditors with Priority f. Unsecured Creditors without Priority 9. Capital Deficit
Transcribed Image Text:Mallory Corporation is being liquidated. On May 1, 20x5, you are appointed the court's trustee for the liquidation. The book values for assets and liabilities, on May 1, 20x5, were as follows: Cash Accounts receivable (net) Inventories Land and building (net) Machinery (net) Accounts payable Salaries payable Income tax payable Trustee's fee payable Mortgage payable Bank loan payable P 4,000 80,000 200,000 340,000 100,000 180,000 60,000 14,000 20,000 240,000 90,000 During May through July of 20x5, the following occurred: the mortgage is secured by the land and building, and the bank loan is secured by the machinery. The accounts payable are secured by the inventories; three-fourths of the accounts receivable were collected. Of the remaining accounts, P10,000 are believed to be uncollectible; the inventories were sold for P170,000; the land and building were sold for P20,000 and the assumption of the mortgage. The machinery sold for P70,000, and the proceeds were remitted to the bank: Salaries payable and P170,000 of the accounts payable were paid. Requirement: 1. Prepare the Statement of Liquidation and Realization using the T-account format. 2. Determine the following ending balances at the end of July 20x5: a. Cash b. Non-cash Asset c. Fully-secured creditors d. Partially-secured creditors e. Unsecured Creditors with Priority f. Unsecured Creditors without Priority 9. Capital Deficit
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