Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value P300,000 355,649 200,000 1,500,000 P2,355,649 Cash P250,000 150,000 600,000 1,700,000 P2,700,000 Accounts Receivable Equipment-net Land TOTAL ASSETS LIABILITIES Accounts Payable Salaries Payable Notes Payable Loan Payable TOTAL LIABILITIES Carrying Amount P1,000,000 500,000 800,000 800,000 P3,100,000 Settlement Amount P1,000,000 500,000 805,234 800,000 P3,105,234 EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: • Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority?

Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value P300,000 355,649 200,000 1,500,000 P2,355,649 Cash P250,000 150,000 600,000 1,700,000 P2,700,000 Accounts Receivable Equipment-net Land TOTAL ASSETS LIABILITIES Accounts Payable Salaries Payable Notes Payable Loan Payable TOTAL LIABILITIES Carrying Amount P1,000,000 500,000 800,000 800,000 P3,100,000 Settlement Amount P1,000,000 500,000 805,234 800,000 P3,105,234 EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: • Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority?

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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