Miner Company is being forced into bankruptcy. The Company’s creditors and stockholders have requested an estimate of the results of liquidation of the Company. Miner’s trial balance follows:   Accounts Debit Credit Cash P6,000   Accounts receivable 63,000   Allowance for bad debts   P2,000 Notes receivable 50,000   Accrued interest on notes receivable 1,200   Inventory 60,000   Buildings 182,000   Accumulated depreciation-Buildings   63,000 Equipment 14,600   Accumulated depreciation-Equipment   1,400 Prepaid insurance 1,100   Goodwill 8,500   Accrued wages   6,000 Taxes payable   2,400 Accounts payable and other liabilities   170,000 Notes payable   80,000 Accrued interest payable   1,600 Common stock   110,000 Retained earnings (deficit) 50,000   Total P436,400 P436,400   The assets are expected to bring cash on conversion in the following amounts: Accounts receivable P50,000 Notes receivable including P1,000 accrued interest   40,800 Building  75,000 Prepaid insurance       400   The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expenses amounting to P1,000. Fair market value of the equipment amounted to P4,200.   The notes receivable are pledged as a security on a note payable of P40,000. A note payable of P20,000 is secured by a lien on the building, and the equipment is pledged as security on a note payable of P10,000. One-half of the interest payable relates to P40,000 note payable; the other half of the interest payable relates to the P20,000 note payable. There is no accrued interest on the other notes payable. Accounts payable and other liabilities include debts, taxes and assessments due to the National Government amounting to P10,000.   The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation.   Requirement: Compute for the payment to each class of creditor. Please show complete and accurate solution

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Miner Company is being forced into bankruptcy. The Company’s creditors and stockholders have requested an estimate of the results of liquidation of the Company. Miner’s trial balance follows:

 

Accounts

Debit

Credit

Cash

P6,000

 

Accounts receivable

63,000

 

Allowance for bad debts

 

P2,000

Notes receivable

50,000

 

Accrued interest on notes receivable

1,200

 

Inventory

60,000

 

Buildings

182,000

 

Accumulated depreciation-Buildings

 

63,000

Equipment

14,600

 

Accumulated depreciation-Equipment

 

1,400

Prepaid insurance

1,100

 

Goodwill

8,500

 

Accrued wages

 

6,000

Taxes payable

 

2,400

Accounts payable and other liabilities

 

170,000

Notes payable

 

80,000

Accrued interest payable

 

1,600

Common stock

 

110,000

Retained earnings (deficit)

50,000

 

Total

P436,400

P436,400

 

The assets are expected to bring cash on conversion in the following amounts:

Accounts receivable

P50,000

Notes receivable including P1,000 accrued interest

  40,800

Building

 75,000

Prepaid insurance

      400

 

The inventory can be sold for P30,000 and is expected to incur shipping costs and selling expenses amounting to P1,000. Fair market value of the equipment amounted to P4,200.

 

The notes receivable are pledged as a security on a note payable of P40,000.

A note payable of P20,000 is secured by a lien on the building, and the equipment is pledged as security on a note payable of P10,000.

One-half of the interest payable relates to P40,000 note payable; the other half of the interest payable relates to the P20,000 note payable.

There is no accrued interest on the other notes payable.

Accounts payable and other liabilities include debts, taxes and assessments due to the National Government amounting to P10,000.

 

The books do not show the estimated trust fees, accounting and legal fees, amounting to P5,000, which will be incurred in connection with the liquidation.

 

Requirement: Compute for the payment to each class of creditor.

Please show complete and accurate solution

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