Accounts payable and other labilities include debts, taxes and assessments due to the National Government amounting to P10,000. The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation. Requirement: Compute for the payment to each class of creditor.
Accounts payable and other labilities include debts, taxes and assessments due to the National Government amounting to P10,000. The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation. Requirement: Compute for the payment to each class of creditor.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Miner Company is being forced into bankruptcy. The Company's creditors and stockholders have
requested an estimate of the results of liquidation of the Company. Miner's trial balance follows:
Credit
Accounts
Cash
Accounts receivable
Allowance for bad debts
Notes receivable
Accrued interest on notes receivable
Inventory
Buildings
Accumulated depreciation-Buildings
Equipment
Accumulated depreciation-Equipment
Prepaid insurance
Goodwill
Accrued wages
Taxes payable
Accounts payable and other liabilities
Notes payable
Accrued interest payable
Common stock
Retained earnings (deficit)
Total
Debit
P6,000
63,000
P2,000
50,000
1,200
60,000
182,000
63,000
14,600
1,400
1,100
8,500
6,000
2,400
170,000
80,000
1,600
110,000
50,000
P436,400 P436,400
The assets are expected to bring cash on conversion in the following amounts
Accounts receivable
Notes receivable including P1,000 accrued
interest
Building
Prepaid insurance
P50,000
40,800
75,000
400
The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expenses
amounting to P1,000. Fair market value of the equipment amounted to P4,200.
The notes receivable are pledged as a security on a note payable of P40,000. A note payable of P20,000 is
secured by a lien on the building, and the equipment is pledged as security on a note payable of P10,000.
One-half of the interest payable relates to P40,000 note payable; the other half of the interest payable
relates to the P20,000 note payable. There is no accrued interest on the other notes payable.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2fc02b5b-d064-442d-9acc-483e3942abdf%2F4e7ea00d-4b0b-4006-9a7b-8ef83ab297d8%2F0kiozjh_processed.png&w=3840&q=75)
Transcribed Image Text:Miner Company is being forced into bankruptcy. The Company's creditors and stockholders have
requested an estimate of the results of liquidation of the Company. Miner's trial balance follows:
Credit
Accounts
Cash
Accounts receivable
Allowance for bad debts
Notes receivable
Accrued interest on notes receivable
Inventory
Buildings
Accumulated depreciation-Buildings
Equipment
Accumulated depreciation-Equipment
Prepaid insurance
Goodwill
Accrued wages
Taxes payable
Accounts payable and other liabilities
Notes payable
Accrued interest payable
Common stock
Retained earnings (deficit)
Total
Debit
P6,000
63,000
P2,000
50,000
1,200
60,000
182,000
63,000
14,600
1,400
1,100
8,500
6,000
2,400
170,000
80,000
1,600
110,000
50,000
P436,400 P436,400
The assets are expected to bring cash on conversion in the following amounts
Accounts receivable
Notes receivable including P1,000 accrued
interest
Building
Prepaid insurance
P50,000
40,800
75,000
400
The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expenses
amounting to P1,000. Fair market value of the equipment amounted to P4,200.
The notes receivable are pledged as a security on a note payable of P40,000. A note payable of P20,000 is
secured by a lien on the building, and the equipment is pledged as security on a note payable of P10,000.
One-half of the interest payable relates to P40,000 note payable; the other half of the interest payable
relates to the P20,000 note payable. There is no accrued interest on the other notes payable.
![Accounts payable and other liabilities include debts, taxes and assessments due to the National
Government amounting to P10,000.
The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which
will be incurred in connection with the liquidation.
Requirement: Compute for the payment to each class of creditor.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2fc02b5b-d064-442d-9acc-483e3942abdf%2F4e7ea00d-4b0b-4006-9a7b-8ef83ab297d8%2Fvi20dh8_processed.png&w=3840&q=75)
Transcribed Image Text:Accounts payable and other liabilities include debts, taxes and assessments due to the National
Government amounting to P10,000.
The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which
will be incurred in connection with the liquidation.
Requirement: Compute for the payment to each class of creditor.
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