ABC Inc. filed a petition for insolvency. The trustee provided the following information about the company's statement of affairs. Book value Estimated realizable value Assets: Cash 160,000 160,000 Accounts receivable 800,000 600,000 Inventorics 1,200,000 560,000 Equipment 2,000,000 2,240,000 Liabilities: Unsecured with priority Unsecured without priority Partially secured (secured by accounts receivable) Fully secured (secured by equipment) 640,000 1,200,000 800,000 1,760,000
ABC Inc. filed a petition for insolvency. The trustee provided the following information about the company's statement of affairs. Book value Estimated realizable value Assets: Cash 160,000 160,000 Accounts receivable 800,000 600,000 Inventorics 1,200,000 560,000 Equipment 2,000,000 2,240,000 Liabilities: Unsecured with priority Unsecured without priority Partially secured (secured by accounts receivable) Fully secured (secured by equipment) 640,000 1,200,000 800,000 1,760,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
How much is the net free assets?
How much is the estimated deficiency to unsecured creditors?
What is the estimated recovery percentage of unsecured non-priority creditors?
Transcribed Image Text:ABC Inc. filed a petition for insolvency. The trustee provided the following information about the company's
statement of affairs.
Book value Estimated realizable value
Assets:
Cash
160,000
160,000
Accounts receivable
800,000
600,000
Inventorics
1,200,000
560,000
Equipment
2,000,000
2,240,000
Liabilities:
Unsecured with priority
Unsecured without priority
Partially secured (secured by accounts receivable)
Fully secured (secured by equipment)
640,000
1,200,000
800,000
1,760,000
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