A statement of financial affairs created for an insolvent corporation that is beginning the process of liquidation discloses the following data. The assets are shown at net realizable values. Assets pledged with fully secured creditors$212,000Fully secured liabilities 156,000Assets pledged with partially secured creditors 386,000Partially secured liabilities 502,000Assets not pledged 306,000Unsecured liabilities with priority 208,400Accounts payable (unsecured) 396,000 The company owes $9,000 on an account payable to an unsecured creditor (without priority). How much money can this creditor expect to collect?The company owes $112,000 to a bank on a note payable that is secured by a security interest attached to property with an estimated net realizable value of $86,000. How much money can the bank expect to collect? a.Expected amount by creditor b.Expected amount by bank

SOLUTION- WORKING NOTE- 1- COMPUTE THE AMOUNT OF MONEY CAN THIS CREDITOR EXPECTED TO COLLECT- PARTICULARS AMOUNT AMOUNT AVAILABLE FOR UNSECURED CREDITORS ASSETS NOT PLEDGED 306000 ADD- EXCESS ASSETS OF FULLY SECURED CREDITORS (212000-156000) 56000 TOTAL AMOUNT 362000 LESS- UNSECURED LIABILITIES WITH PRIORITY (208400) AMOUNT AVAILABLE FOR UNSECURED CREDITORS (A) 153600 CALCULATION OF UNSECURED CREDITORS ACCOUNTS PAYABLE (UNSECURED) 396000 PARTIALLY SECURED CREDITORS (502000-386000) 116000 TOTAL UNSECURED CREDITORS 512000 DISTRIBUTION TO UNSECURED CREDITORS (A/B) 30%ANSWER-1 AMOUNT RECEIVED BY $9000 UNSECURED CREDITORS = $9000*30% = $2700 . ANSWER-2 COMPUTE THE AMOUNT OF MONEY , THIS BANK EXPECTS TO COLLECT: SECURED PORTION 86000 UNSECURED PORTION (112000-86000)*305 7800 EXPECTED AMOUNT RECEIVED BY BANK 93800 SO EXPECTED AMOUNT RECEIVED BY BANK IS = $93800 .

Answered: A statement of financial affairs…

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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A statement of financial affairs created for an insolvent corporation that is beginning the process of liquidation discloses the following data. The assets are shown at net realizable values.


Assets pledged with fully secured creditors	$	212,000
Fully secured liabilities		156,000
Assets pledged with partially secured creditors		386,000
Partially secured liabilities		502,000
Assets not pledged		306,000
Unsecured liabilities with priority		208,400
Accounts payable (unsecured)		396,000

The company owes $9,000 on an account payable to an unsecured creditor (without priority). How much money can this creditor expect to collect?
The company owes $112,000 to a bank on a note payable that is secured by a security interest attached to property with an estimated net realizable value of $86,000. How much money can the bank expect to collect?


a.	Expected amount by creditor
b.	Expected amount by bank

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