Miner Company is being forced into bankruptcy. The Company's creditors and stockholders haverequested an estimate of the results of liquidation of the Company. Miner's trial balance follows:AccountsCashDebitCreditP6,00063,000Accounts receivableAllowance for bad debtsP2,000Notes receivable50,0001,200Accrued interest on notes receivableInventoryBuildingsAccumulated depreciation-BuildingsEquipmentAccumulated depreciation-EquipmentPrepaid insurance60,000182,00063,00014,6001,4001,100Goodwill8,500Accrued wages6,0002,400170,00080,0001,600Taxes payableAccounts payable and other liabilitiesNotes payableAccrued interest payableCommon stock110,000Retained earnings (deficit)50,000TotalP436,400 P436,400The assets are expected to bring cash on conversion in the following amountsAccounts receivableP50,00040,800Notes receivable including P1,000 accruedinterestBuilding75,000Prepaid insurance400 The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expensesamounting 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 issecured 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 payablerelates to the P20,000 note payable. There is no accrued interest on the other notes payable.payable and other liabilities include debts, taxes and assessmentsNationalGovernment amounting to P10,000.The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, whichwill be incurred in connection with the liquidation.Requirement: Compute for the payment to each class of creditor.

Liquidation Process In the liquidation process in a company first to taken up whole assets which can…

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.

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.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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:
Accounts
Cash
Debit
Credit
P6,000
63,000
Accounts receivable
Allowance for bad debts
P2,000
Notes receivable
50,000
1,200
Accrued interest on notes receivable
Inventory
Buildings
Accumulated depreciation-Buildings
Equipment
Accumulated depreciation-Equipment
Prepaid insurance
60,000
182,000
63,000
14,600
1,400
1,100
Goodwill
8,500
Accrued wages
6,000
2,400
170,000
80,000
1,600
Taxes payable
Accounts payable and other liabilities
Notes payable
Accrued interest payable
Common stock
110,000
Retained earnings (deficit)
50,000
Total
P436,400 P436,400
The assets are expected to bring cash on conversion in the following amounts
Accounts receivable
P50,000
40,800
Notes receivable including P1,000 accrued
interest
Building
75,000
Prepaid insurance
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.
payable and other liabilities include debts, taxes and assessments
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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