ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 20, Problem 20.5E
To determine
Introduction: The statement of realization and liquidation reports the liquidation results of a company undergoing liquidation process. It provides an ongoing reporting of the trustee’s activities and the position of liquidation.
the statement of realization and liquidation.
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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?
PAYLESS Corporation filed a petition of bankruptcy on January 2011. On March 15, 2011 the trustee provided the
following information about the corporation's financial affairs.
Book values
Estimated
Realizable
Values
Assets
P 200, 000
1, 000, 000
1, 500, 000
2. 500, 000
P 5,200, 000
P 200, 000
750, 000
750, 000
2, 800, 000
Cash
Accounts receivable, net
Inventories
Plant assets – net
Total
Liabilities
P 500, 000
1, 500, 000
1, 000, 000
2, 200, 000
P 5. 200. 000
4. Determine the amount expected to be available for unsecured claims.
Liability for priority claims
Accounts payable – unsecured
Note payable, secured by accounts receivable
Mortgage payable, secured by all plant assets
Total
A. P1, 500, 000
B. P900, 000
С. Р800, 000
D. P1, 050, 000
5. Determine the expected recovery per peso of unsecured claims.
A. PO.60
B. PO.5720
С. РО.70
D. PO.6350
6. The amount of recovery to unsecured accounts payable.
A. P855, 000
C. P1, 290, 000
B. P900, 000
D. P600, 000
PAYLESS Corporation filed a petition of bankruptcy on January 2011. On March 15, 2011 the trustee provided the
following information about the corporation's financial affairs.
Book values
Estimated
Realizable
Values
Assets
P 200, 000 P 200, 000
750, 000
750, 000
2, 800, 000
Cash
Accounts receivable, net
Inventories
1, 000, 000
1, 500, 000
2, 500, 000
P 5.200.000
Plant assets – net
Total
Liabilities
P 500, 000
1, 500, 000
1, 000, 000
2, 200, 000
P 5. 200, 00Q
4. Determine the amount expected to be available for unsecured claims.
Liability for priority claims
Accounts payable – unsecured
Note payable, secured by accounts receivable
Mortgage payable, secured by all plant assets
Total
A. P1, 500, 000
В. Р900, 000
C. P800, 000
D. P1, 050, 000
Chapter 20 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
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- 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…arrow_forward8 ABC Company filed for a voluntary bankruptcy which was granted after having submitted all the required papers and documents. You are provided the following information as of June 30, 2022: Assets Net Book Value Liquidation Value Cash P 4,997 Investments in equity securities 25,000 P40,000 plus uncollected dividends of P5,000 Accounts receivable, net 54,000 P28,000 expected collection Inventory 75,000 P100,000 after further processing of P10,000 Prepaid expense 8,000 P2,000 is refundable Land 140,000 150% of net book value Building, net 200,000 90% of net book value Equipment 80,000 30% of net book value Goodwill 10,000 Liabilities and Equity Carrying Value Other Information Notes payable P120,000 Secured by inventory Trade and other payables 100,000 Loans payable 350,000 Secured by land and…arrow_forwardBorden 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 )arrow_forward
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- 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): Assets pledged with fully secured creditors $220,000 Fully secured liabilities 160,000 Assets pledged with partially secured creditors 390,000 Partially secured liabilities 510,000 Assets not pledged 310,000 Unsecured liabilities with priority 182,800 Accounts payable (unsecured) 400,000 This company owes $13,000 to an unsecured creditor (without priority). How much money can this creditor expect to collect? 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?arrow_forward11 Tsup-Tsup Corporation filed a bankruptcy petition on January 2009. On March 1, 2009, the trustee provided the following information about the corporation’s financial affairs: Assets Book value Realizable Value Cash P40,000 P40,000 Accounts receivable-net 200,000 150,000 Inventories 300,000 140,000 Plant assets-net 500,000 560,000 Total Assets P1,040,000 Liabilities Liabilities for priority claims P160,000 Accounts payable-unsecured 300,000 Notes payable, secured by Accounts receivable 200,000 Mortgage payable,…arrow_forwardABC Company is beginning the process of liquidation. ABC has prepared a statement of financial affairs that discloses the following data: Assets pledged with secured creditors $ 210,000 Secured liabilities 125,000 Assets pledged with partially secured creditors 290,000 Free assets (not including excess to be received from assets pledged on secured liabilities) 225,000 Unsecured liabilities with priority 121,000 Unsecured liabilities 450,000 ABC owes $45,000 to Wallace Company, an unsecured creditor (without priority). How much money can Wallace Company expect to collect from ABC?arrow_forward
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