DistressedJon is unrgoing liquidaion. Relevart ihlorJon asShown beiow:ASSETSCarryingAmountNet RealizableValueP250,000150,000600,0001,700,000P2,700,000CashAccounts ReceivableEquipment-netLandP300,000355,649200,0001,500,000P2,355,649TOTAL ASSETSLIABILITIESAccounts PayableSalaries PayableNotes PayableLoan PayableCarryingAmountP1,000,000500,000SettlementAmountP1,000,000500,000805,234800,000P3,105,234800,000800,000P3,100,000TOTAL LIABILITIESEQUITYShare CapitalRetained EarningsCapital DeficiencyP1,600,000(2,000,000)(400,000)TOTAL LIABILITIES & EQUITYP2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidationprocess.• The equipment is pledged to the loan 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?4. How much are the net free assets?5. What is the estimated deficiency?6. What is the estimated recovery percentage?7. What is the amount paid to unsecured creditors without priority?8. What is the amount paid to partially secured creditors?

The given question has more than 3 subparts so as per the policy of the company only the first 3…

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? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?

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? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?

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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Question

Distressed
Jon is un
rgoing liquidaion. Relevart ihlor
Jon as
Shown beiow:
ASSETS
Carrying
Amount
Net Realizable
Value
P250,000
150,000
600,000
1,700,000
P2,700,000
Cash
Accounts Receivable
Equipment-net
Land
P300,000
355,649
200,000
1,500,000
P2,355,649
TOTAL ASSETS
LIABILITIES
Accounts Payable
Salaries Payable
Notes Payable
Loan Payable
Carrying
Amount
P1,000,000
500,000
Settlement
Amount
P1,000,000
500,000
805,234
800,000
P3,105,234
800,000
800,000
P3,100,000
TOTAL LIABILITIES
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.
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?
4. How much are the net free assets?
5. What is the estimated deficiency?
6. What is the estimated recovery percentage?
7. What is the amount paid to unsecured creditors without priority?
8. What is the amount paid to partially secured creditors?

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