Because of the inability to pay debts, Steven Company has been forced into bankruptcy as of April 30,2021. The statement of financial position on that date shows:AssetsLiabilitiesP 2,700 Accounts Payable39,350 Notes Payable - PNB18,500 Notes Payable - Suppliers87,850 Accrued Wages950 Accrued TaxesCashAccounts ReceivableP 52,50015,00051,2501,850Notes ReceivableInventoriesPrepaid ExpensesLand and Buildings4,65061,250 Mortgage Bond Payable90,00048,800 Ordinary Share - P100 parAccumulated Profit (Deficit)Equipment75,000(30,850)P259,400P259,400Accounts receivable of P16,110 and notes receivable of P12,500 are expected to be collectible. Thegood notes are pledged to Phil. National Bank. Inventories are expected to bring in P45,100 when soldunder bankruptcy conditions. Land and building have an appraised value of P95,000. They serve assecurity on the bonds. The current value of the equipment, net of disposal cost is P9,000. Theexpected recovery percentage rounded off is:50%67%47%48%

Answered: Because of the inability to pay debts,…

Because of the inability to pay debts, Steven Company has been forced into bankruptcy as of April 30, 2021. The statement of financial position on that date shows:

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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Question

Because of the inability to pay debts, Steven Company has been forced into bankruptcy as of April 30,
2021. The statement of financial position on that date shows:
Assets
Liabilities
P 2,700 Accounts Payable
39,350 Notes Payable - PNB
18,500 Notes Payable - Suppliers
87,850 Accrued Wages
950 Accrued Taxes
Cash
Accounts Receivable
P 52,500
15,000
51,250
1,850
Notes Receivable
Inventories
Prepaid Expenses
Land and Buildings
4,650
61,250 Mortgage Bond Payable
90,000
48,800 Ordinary Share - P100 par
Accumulated Profit (Deficit)
Equipment
75,000
(30,850)
P259,400
P259,400
Accounts receivable of P16,110 and notes receivable of P12,500 are expected to be collectible. The
good notes are pledged to Phil. National Bank. Inventories are expected to bring in P45,100 when sold
under bankruptcy conditions. Land and building have an appraised value of P95,000. They serve as
security on the bonds. The current value of the equipment, net of disposal cost is P9,000. The
expected recovery percentage rounded off is:
50%
67%
47%
48%

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