Goodbye Co's financial position before the start of its liquidation is as follows: ASSETS Cash Accounts Receivable Prepaid Expenses Inventory Land Building Equipment, net Goodwill TOTAL LIABILITIES and EQUITY 138,400 Accounts Payable 1,200,000 Income Tax Payable 50,000 Note Payable [secured by equipment] 3,120,000 Loan Payable [secured by land and building] 1,600,000 Share Capital 2,400,000 Retained Earnings [Deficit] 800,000 100,000 9,408,400 TOTAL 3,200,000 1,800,000 2,000,000 2,400,000 4,000,000 (3,991,600) 9,408,400 • Only 50% of the accounts receivable is collectible. • The entire inventory is expected to be sold half the price. • The land and building are expected to be sold at a lump sum price of P4,600,000. The equipment is expected to be sold at carrying amount but after refurbishment costs of P140,000. . Certain accounts payable are measured gross of P 46,000 cash discount which Goodbye intends to take. A supplier waived repayment of a P 840,000 account. The prepayments are fully refundable. The taxing authority gave Goodbye a six-month tax amnesty to settle the tax liability for P1,560,000. Interests of P 160,000 and P 140,000 are expected to be paid on the note and loan, respectively. Liquidation costs of P 240,000 are expected to be incurred. Accrued wages payable not yet recorded amounted to P 320,000.
Goodbye Co's financial position before the start of its liquidation is as follows: ASSETS Cash Accounts Receivable Prepaid Expenses Inventory Land Building Equipment, net Goodwill TOTAL LIABILITIES and EQUITY 138,400 Accounts Payable 1,200,000 Income Tax Payable 50,000 Note Payable [secured by equipment] 3,120,000 Loan Payable [secured by land and building] 1,600,000 Share Capital 2,400,000 Retained Earnings [Deficit] 800,000 100,000 9,408,400 TOTAL 3,200,000 1,800,000 2,000,000 2,400,000 4,000,000 (3,991,600) 9,408,400 • Only 50% of the accounts receivable is collectible. • The entire inventory is expected to be sold half the price. • The land and building are expected to be sold at a lump sum price of P4,600,000. The equipment is expected to be sold at carrying amount but after refurbishment costs of P140,000. . Certain accounts payable are measured gross of P 46,000 cash discount which Goodbye intends to take. A supplier waived repayment of a P 840,000 account. The prepayments are fully refundable. The taxing authority gave Goodbye a six-month tax amnesty to settle the tax liability for P1,560,000. Interests of P 160,000 and P 140,000 are expected to be paid on the note and loan, respectively. Liquidation costs of P 240,000 are expected to be incurred. Accrued wages payable not yet recorded amounted to P 320,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Goodbye Co's financial position before the start of its liquidation is as follows:
ASSETS
Cash
Accounts Receivable
Prepaid Expenses
Inventory
Land
Building
Equipment, net
Goodwill
TOTAL
LIABILITIES and EQUITY
·
138,400 Accounts Payable
1,200,000 Income Tax Payable
50,000
.
Note Payable [secured by
equipment]
.
3,120,000 Loan Payable [secured by
land and building]
1,600,000 Share Capital
2,400,000 Retained Earnings [Deficit]
800,000
100,000
9,408,400 TOTAL
• Only 50% of the accounts receivable is collectible.
• The entire inventory is expected to be sold half the price.
•
The land and building are expected to be sold at a lump sum price of P4,600,000.
b. 1,386,600
c. 1,525,600
3,200,000
1,800,000
2,000,000
• The equipment is expected to be sold at carrying amount but after refurbishment
costs of P140,000.
2,400,000
. Certain accounts payable are measured gross of P 46,000 cash discount which
Goodbye intends to take. A supplier waived repayment of a P 840,000 account.
• The prepayments are fully refundable.
4,000,000
(3,991,600)
The taxing authority gave Goodbye a six-month tax amnesty to settle the tax liability
for P1,560,000.
Interests of P 160,000 and P 140,000 are expected to be paid on the note and loan,
respectively.
• Liquidation costs of P 240,000 are expected to be incurred.
Accrued wages payable not yet recorded amounted to P 320,000.
12. How much of the assets will be available to unsecured liabilities?
a. 2,288,400
9,408,400
b. 4,408,400
c. 4,548,400
d. 2,528,400
13. How much is the estimated deficiency to unsecured creditors without priority?
a. 1,285,600
d. 0
14. Which of the following statements is true?
a. Shareholders of Goodbye can expect to receive 60% of their claims.
b. The lender of the loan payable will receive 60% of its claim.
c. Employees of Goodbye can expect to receive only 60% of their claims.
d. The issuer of the note payable will receive 1,560,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd99593f3-db82-42cf-aed6-1e0dfde299bd%2Fa8dc4935-7001-46b7-92e2-7ac0fcecbfbd%2Fggks5tl_processed.png&w=3840&q=75)
Transcribed Image Text:Goodbye Co's financial position before the start of its liquidation is as follows:
ASSETS
Cash
Accounts Receivable
Prepaid Expenses
Inventory
Land
Building
Equipment, net
Goodwill
TOTAL
LIABILITIES and EQUITY
·
138,400 Accounts Payable
1,200,000 Income Tax Payable
50,000
.
Note Payable [secured by
equipment]
.
3,120,000 Loan Payable [secured by
land and building]
1,600,000 Share Capital
2,400,000 Retained Earnings [Deficit]
800,000
100,000
9,408,400 TOTAL
• Only 50% of the accounts receivable is collectible.
• The entire inventory is expected to be sold half the price.
•
The land and building are expected to be sold at a lump sum price of P4,600,000.
b. 1,386,600
c. 1,525,600
3,200,000
1,800,000
2,000,000
• The equipment is expected to be sold at carrying amount but after refurbishment
costs of P140,000.
2,400,000
. Certain accounts payable are measured gross of P 46,000 cash discount which
Goodbye intends to take. A supplier waived repayment of a P 840,000 account.
• The prepayments are fully refundable.
4,000,000
(3,991,600)
The taxing authority gave Goodbye a six-month tax amnesty to settle the tax liability
for P1,560,000.
Interests of P 160,000 and P 140,000 are expected to be paid on the note and loan,
respectively.
• Liquidation costs of P 240,000 are expected to be incurred.
Accrued wages payable not yet recorded amounted to P 320,000.
12. How much of the assets will be available to unsecured liabilities?
a. 2,288,400
9,408,400
b. 4,408,400
c. 4,548,400
d. 2,528,400
13. How much is the estimated deficiency to unsecured creditors without priority?
a. 1,285,600
d. 0
14. Which of the following statements is true?
a. Shareholders of Goodbye can expect to receive 60% of their claims.
b. The lender of the loan payable will receive 60% of its claim.
c. Employees of Goodbye can expect to receive only 60% of their claims.
d. The issuer of the note payable will receive 1,560,000.
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