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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 Accounts Receivable Note Receivable P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable – PNB Notes Payable - suppliers Accrued wages Accrued taxes Mortgage Bonds Payable Common stock - P100 par Retained Earnings Total Liabilities & Equity P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Inventory Prepaid Expenses Land and Building Equipment, net Total Assets 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. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors

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 Accounts Receivable Note Receivable P5,400 78,700 37,000 175,700 1,900 122,500 97,600 Accounts Payable Notes Payable – PNB Notes Payable - suppliers Accrued wages Accrued taxes Mortgage Bonds Payable Common stock - P100 par Retained Earnings Total Liabilities & Equity P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Inventory Prepaid Expenses Land and Building Equipment, net Total Assets 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. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors

FINANCIAL ACCOUNTING
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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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 P5,400 78,700 37,000 175,700 1,900 122,500 Accounts Payable Notes Payable – PNB Notes Payable – suppliers Accrued wages Accrued taxes Mortgage Bonds Payable Common stock – P100 par Retained Earnings Total Liabilities & Equity P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Cash Accounts Receivable Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net 97,600 Total Assets 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. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors
Transcribed Image Text: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 P5,400 78,700 37,000 175,700 1,900 122,500 Accounts Payable Notes Payable – PNB Notes Payable – suppliers Accrued wages Accrued taxes Mortgage Bonds Payable Common stock – P100 par Retained Earnings Total Liabilities & Equity P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Cash Accounts Receivable Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net 97,600 Total Assets 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. Using the above data, compute the following: 1. Total free assets 2. Net free assets 3. Unsecured liabilities with priority 4. Unsecured liabilities without priority 5. Estimated recovery percentage 6. Net gain (loss) on realization 7. Estimated deficiency 8. Net income (loss) on realization and liquidation 9. Amount paid to partially secured creditors 10. Amount paid to unsecured creditors without priority 11. Total estimated payment to creditors 12. Total payment to unsecured creditors
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