Answered: Sisy Company

Business

Accounting

Sisy Company

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 16P

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The Statement of Affairs for Ivan Corporation shows that approximately P0.78 on the peso probably will be paid to unsecured creditors without priority. The corporation owes JICR Company P23,000 on a promissory note, plus accrued interest on P940. Inventories with a current fair value of P19,200 collateralized the note payable. Compute the amount that JICR Company should receive from Ivan Corporation assuming that the actual payments to unsecured creditors without priority consist of 78% of total claims.
The statement of affairs of Darrell Putix Co. indicates that unsecured creditors without priority with total claims of P720,000 may expect to recover only P288,000 after all the assets were sold. Among the creditors of Darrell Putix Co. are the following: Government – taxes payable of P400,000, inclusive of P80,000 assessments and surcharges. • XYZ bank – loan payable of P4,000,000 and accrued interest of P200,000, backed by collateral security with realizable value of P4,800,000. • Alpha Financing Co. - loan payable of P3,200,000 backed by collateral security with realizable value of P2,000,000. Mr. Bombay – loan payable of P1,000,000 and accrued interest of P200,000. No collateral security. How much is the expected recovery of partially secured creditors?
18. The statement of affairs of Darrell Putix Co. indicates that unsecured creditors without priority with total claims of P720,000 may expect to recover only P288,000 after all the assets are sold. Among the creditors of Darrell Putix Co. are the following: • Government – taxes payable of P400,000, inclusive of P80,000 assessments and surcharges. • XYZ bank – loan payable of P4,000,000 and accrued interest of P200,000, backed by collateral security with realizable value of P4,800,000. • Alpha Financing Co. – loan payable of P3,200,000 backed by collateral security with realizable value of P2,000,000. • Mr. Bombay – loan payable of P1,000,000 and accrued interest of P200,000. No collateral security. How much is the expected recovery of Mr. Bombay? a. 780,000 b. 480,000 c. 288,000 d. 0
Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1 million and related liabilities of $1.25 million. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities. a. How much gross income does KuhnCo report as a result of the debt cancellation? b. How would your answer change, if at all, had the lender cancelled $200,000 of the debt?
13. In 2023, a corporation sells its business in an arm's length transaction for proceeds equal to FMV. At the time of the sale the business has accounts receivable of $123,000. The corporate vendor of the business and the purchaser agree that the realizable value of the receivables is $118,500. In 2022, the vendor had deducted a reserve for doubtful debts of $6,800. Which of the following statements is correct? A. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $2,300. B. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $6,800 and an allowable capital loss of $2,250. C. If a joint election is filed under ITA 22, the vendor will have a business deduction of $2,300. D. If a joint election is filed under ITA 22, the vendor will have a business deduction of $4,500. 14. During the current year, Denos Corporation incurred costs of $45,000 for leasehold improvements to its newly rented…
Kk. 235.
Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million 9% loan with a bank. Vaughn Manufacturing also pays a finance fee of 2% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables?
On Jan. 1, 2021, Yumi Co. settled a P 1,000,000 loan payable with an unamortized discount of P 20,000 and accrued interest of P 90,000 by transferring to the lender old equipment with cost of P 3,000,000, accumulated depreciation of P 2,200,000 and fair value of P 900,000. How much gain on extinguishment of debt is to be recognized? a. P 270,000b. P 290,000c. P 250,000d. P 150,000
The Abra Company owes P200,000 on a note payable plus P8,000 in interest to its bank. The note is scoured by inventory with a book value of P160,000 and a fair value of P120,000. What amount will the bank received if unsecured creditors receive 75% of their claims?
3. What is the carrying amount of the modified note payable P500,000. The entity is granted by the creditor in a debt note payable of P5,000,000 and accrued interest payable of On January 1, 2021, Kingdom Company had an crerdue 10% note payable of P5,000,000 and accrued interest payable : restructuring agreement the following concessions: a. Accrued interest of P500,000 is forgiven. b. The new interest rate is 14% payable annually every December 31. c. The new maturity date of the note is December 31, 2024. d. The entity paid P290,000 to the creditor as arrangement fee or modification cost. e. Considering the effect of the modification cost or arrangement fee, the new'effective interest rate is 12%. f. The market rate of interest for similar note is 9%. 9% 10% 12% PV of 1 for 4 periods PV of an ordinary annuity of 1 for 4 periods 0.71 0.68 0.64 3.24 3.17 3.04 1. What amount of loss on modification should be recognized for 2021? 409,000 b. 119,000 291,000 d. а. с. 2. What amount should…
E6.21 (LO 5) (Transfer of Receivables) Use the information for Jones Company as presented in E6.20. Jones is planning to factor some accounts receivable at the end of the year. Accounts totaling $25,000 will be transferred to Credit Factors, Inc. with recourse. Credit Factors will retain 5% of the balances for probable adjustments and assesses a finance charge of 4%. The fair value of the recourse obligation is $1,200. Instructions a. Prepare the journal entry to record the sale of the receivables.
Lolo Co. owes $150,000 in notes payable plus $12,000 of accrued interest to, the company is having financial difficulty. Prepare the journal entry on Lolo Co. 's books to record the settlement of this debt under the following independent cases: a) To eliminate the debt, the creditor agrees to accept from Lolo Co. land having a fair value of $140,000 and a recorded cost of $145,000. b) To eliminate the debt, the creditor agrees to take an equity interest in Lolo Co. Lolo Co issued 10,000 ordinary shares having a fair value of $14 per share and $5 par value per share. c) To eliminate the debt, the creditor agrees to restructure the debt by issuing a new zero interest bearing note with $170,000 face value for 3 years. The market interest rate of similar notes is 9%.