Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts. The statement of financial position on that date shows: ASSETS LIABILITIES & EQUITY Cash P5,400 Accounts Payable P105,000 Accounts Receivable 78,700 Notes Payable – PNB 30,000 Note Receivable 37,000 Notes Payable – suppliers 102,500 Inventory 175,700 Accrued wages 3,700 Prepaid Expenses 1,900 Accrued taxes 9,300 Land and Building 122,500 Mortgage Bonds Payable 180,000 Equipment, net 97,600 Common stock – P100 par 150,000 Retained Earnings (61,700) Total Assets P518,800 Total Liabilities & Equity P518,800 Additional information: a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good notes are pledged to Philippine National Bank. b. Inventories are expected to bring in P90,200 when sold under bankruptcy conditions. c. Land and buildings have an appraised value of P190,000. They serve as security on the bonds. d. The current value of the equipment, net of disposal cost is P18,000. e. Estimated legal and accounting fees for the liquidation are P2,000. f. Unrecorded interest on notes payable to supplier amounts to P1,000. 7. Estimated deficiency _____________ 8. Net income (loss) on realization and liquidation _____________ 9. Amount paid to partially secured creditors

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts.
The statement of financial position on that date shows:
ASSETS LIABILITIES & EQUITY
Cash P5,400 Accounts Payable P105,000
Accounts Receivable 78,700 Notes Payable – PNB 30,000
Note Receivable 37,000 Notes Payable – suppliers 102,500
Inventory 175,700 Accrued wages 3,700
Prepaid Expenses 1,900 Accrued taxes 9,300
Land and Building 122,500 Mortgage Bonds Payable 180,000
Equipment, net 97,600 Common stock – P100 par 150,000
Retained Earnings (61,700)
Total Assets P518,800 Total Liabilities & Equity P518,800
Additional information:
a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good
notes are pledged to Philippine National Bank.
b. Inventories are expected to bring in P90,200 when sold under bankruptcy conditions.
c. Land and buildings have an appraised value of P190,000. They serve as security on the bonds.
d. The current value of the equipment, net of disposal cost is P18,000.
e. Estimated legal and accounting fees for the liquidation are P2,000.
f. Unrecorded interest on notes payable to supplier amounts to P1,000.

7. Estimated deficiency _____________
8. Net income (loss) on realization and liquidation _____________
9. Amount paid to partially secured creditors

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