Mindtap For Brigham/ehrhardt's Financial Management: Theory & Practice, 1 Term Printed Access Card (mindtap Course List)
16th Edition
ISBN: 9781337909655
Author: Eugene F. Brigham, Michael C. Ehrhardt
Publisher: Cengage Learning
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Chapter 24, Problem 5SP
Summary Introduction
Determine: Amount that is available for distribution to shareholders and all claimants.
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11
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,…
25
Spectrum Corporation is experiencing severe financial difficulties and is considering filing a bankruptcy petition. At this time, it has the following information:
Notes payable amounting to P92,000 is secured by Furniture estimated to be sold at P102,500 which is 2/3 of its recorded amount.
Of the P244,500 loans payable, P68,750 is secured by a machinery with a carrying amount of P96,000 expected to make proceeds equal to 70% of its book value.
Equipment with a carrying amount of P161,250 has an estimated realizable value of P123,750.
Other unrecorded liabilities are accrued interest on notes, P3,875; salaries payable, P21,750; taxes payable, P14,500; and trustee’s fee, P10,625.
Cash available prior to liquidation amounts to P14,875.
Total assets of Spectrum Corp. presented in the Statement of Financial Position prior to liquidation amounts to P600,000 including prepaid expenses and goodwill amounting to P9,500 and P27,500, respectively which have no estimated realizable…
8
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…
Chapter 24 Solutions
Mindtap For Brigham/ehrhardt's Financial Management: Theory & Practice, 1 Term Printed Access Card (mindtap Course List)
Ch. 24 - Prob. 1QCh. 24 - Why do creditors usually accept a plan for...Ch. 24 - Would it be a sound rule to liquidate whenever the...Ch. 24 - Why do liquidations usually result in losses for...Ch. 24 - Prob. 5QCh. 24 - Southwestern Wear Inc. has the following balance...Ch. 24 - At the time it defaulted on its interest payments...Ch. 24 - Prob. 4PCh. 24 - Prob. 5SPCh. 24 - Prob. 1MC
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