Ataway Company has suffered severe financial difficulties and is considering filing a bankruptcy petition. It has the following assetsand liabilities. The assets are stated at net realizable value.Assets (pledged against debts of $78,000)Assets (pledged against debts of $146,000)Other assetsLiabilities with priorityOther unsecured creditors$ 132,00058,00088,00053,200208,000In a liquidation, how much money would be paid on the partially secured debt?Payment on partially secured debt$ 82,667

Step 1:Computation of amount to be paid to partially secured debt as follows :…

Answered: Ataway Company has suffered severe…

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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S Olds Company declares Chapter 7 bankruptcy. The following are the book values of the asset and liability accounts at that time. A bankruptcy expert estimates that administrative expense will total $31,000. Cash Accounts receivable Inventory Land (secures note A) Building (secures bonds) Equipment Accounts payable Taxes payable to government Note payable A Note payable B Bonds payable $ 43,000 79,000 89,000 Amount to be received 219,000 (valued at $47,000) (valued at $75,000) (valued at $179,000) 419,000 (valued at $358,000) 139,000 (value unknown) 199,000 39,000 208,000 269,000 319,000 The holders of note payable B want to collect at least $134,500. To achieve this goal, how much does the company have to receive in the liquidation of its equipment? $ 238,500
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. c. Global used $4.9 million in cash and $5.4 million in new long-term…
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compute the estimated deficiency compute the expected recovery percentage of unsecured creditors compute the amount of estimated loss on assets realization
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Xavier Company is going through a Chapter 7 bankruptcy. All assets have been liquidated, and the company retains only $27,200 in free cash. The following debts, totaling $48,050, remain: Government claims to unpaid taxes $ 8,000 Salary during last month owed to Mr. Key (not an officer) 19,825 Administrative expenses 4,450 Salary during last month owed to Ms. Rankin (not an officer) 7,225 Unsecured accounts payable 8,550 Indicate how much money will be paid to the creditor associated with each debt.
Shi Company is going through a Chapter 7 bankruptcy. All assets have been liquidated, and the company retains only $26,600 in free cash. The following debts, totaling $45,050, remain: Government claims to unpaid taxes Salary during last month owed to Mr. Key (not an officer) Administrative expenses Salary during last month owed to Ms. Rankin (not an officer) Unsecured accounts payable $ 7,400 19,225 3,850 Indicate how much money will be paid to the creditor associated with each debt. Types of Debts Administrative expenses Salary during last month owed to Mr. Key and Ms. Rankin 6,625 7,950 Answer is complete but not entirely correct. Amounts 3,850 $12.850 $ 3,716 $26,600 Government claims to unpaid taxes
The Walston Company is to be liquidated. It has the following liabilities: Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation The company has the following assets: $ 7,600 136,000 93,000 14,000 78,000 28,000 Book Value Fair Value Current assets $ 88,000 Land 108,000 Buildings and equipment 108,000 $ 43,000 98,000 132,000 Required: How much money will the holders of the notes payable collect following liquidation? Total amount collected
On April 15, 2018 Mike’s Framing Co., declared Chapter 11 bankruptcy, owing James Wholesalers $375.00. James will immediately write off Mike’s account as uncollectible. Prepare the appropriate journal entry for James.
Whispering Company owes $190,000 plus $16,600 of accrued interest to Metlock State Bank. The debt is a 10-year, 10% note. During 2025, Whispering's business deteriorated due to a faltering regional economy. On December 31, 2025, Metlock State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $344,000, accumulated depreciation of $189,200, and a fair value of $166,000. (a) Prepare journal entries for Whispering Company and Metlock State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is ent ed. Do not indent manually. List all debit entries before credit entries.) No. Date Account Titles and Explanation Whispering Company (Debtor): Debit Credit
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. Global used $19.2 million of its available cash to repay $19.2 million…

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