The balance sheet of Evergreen Company on June 30, 2012, contains the following items: Assets Cash P 80,000 140,000 100,000 260,000 200,000 120,000 100,000 P1,000,000 Accountsreceivable (net) Inventories Land Building -net Machinery-net Patent Total Liabilities and Stockholders' Equity Accounts Payable Wag es Payable Taxes Payable Mortg age Payable Interest on Mortgage Payable Notes Payable - unsecured Interest Payable - unsecured Capital Stock Retained Earnings(deficit) Total P 220,000 120,000 20,000 300,000 30,000 100,000 10,000 400,000 (200,000) P1,000,000 The company is in financial difficulty, and its stockholders and creditors have requested a statement of affairs for planning purposes. The following information is available: a. The company estimates that P126,000 is the maximum amount of collectible for the accounts receivable. b. Except for 20% of the inventory items that are damaged and worth only P4,000, the cost of other items is expected to be recovered in full. c. The land and building have a combined appraisal value of P340,000 and are subject to the P300,000 mortgage and related accrued interest. d. The appraised value of the machinery is P40,000. Compute the following: How much is the net free assets? How much is the total unsecured liabilitieswith priority? • How much is the total unsecured liabilities without priority?

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Chapter1: Financial Statements And Business Decisions
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The balance sheet of Evergreen Company on June 30, 2012, contains the following items:
Assets
Cash
P
80,000
140,000
100,000
260,000
200,000
Accounts receivable (net)
Inventories
Land
Building -net
Machinery-net
120,000
100,000
P1,000,000
Patent
Total
Liabilities and Stockholders' Equity
Accounts Payable
Wag es Payable
Taxes Payable
Mortg age Payable
Interest on Mortg age Payable
Notes Payable- unsecured
Interest Payable - unsecured
Capital Stock
Retained Earnings(deficit)
P 220,000
120,000
20,000
300,000
30,000
100,000
10,000
400,000
(200,000)
Total
P1,000,000
The company is in financial difficulty, and its stockholders and creditors have requested a statement of
affairs for planning purposes. The following information is available:
a. The company estimates that P126,000 is the maximum amount of collectible for the accounts
receivable.
b. Except for 20% of the inventory items that are damaged and worth only P4,000, the cost of
other items is expected to be recovered in full.
c. The land and building have a combined appraisal value of P340,000 and are subject to the
P300,000 mortgage and related accrued interest.
d. The appraised value of the machinery is P40,000.
Compute the following:
How much is the net free assets?
How much is the total unsecured liabilities with priority?
How much is the total unsecured liabilities without priority?
Compute the estimated settlement per peso of unsecured creditors.
Transcribed Image Text:The balance sheet of Evergreen Company on June 30, 2012, contains the following items: Assets Cash P 80,000 140,000 100,000 260,000 200,000 Accounts receivable (net) Inventories Land Building -net Machinery-net 120,000 100,000 P1,000,000 Patent Total Liabilities and Stockholders' Equity Accounts Payable Wag es Payable Taxes Payable Mortg age Payable Interest on Mortg age Payable Notes Payable- unsecured Interest Payable - unsecured Capital Stock Retained Earnings(deficit) P 220,000 120,000 20,000 300,000 30,000 100,000 10,000 400,000 (200,000) Total P1,000,000 The company is in financial difficulty, and its stockholders and creditors have requested a statement of affairs for planning purposes. The following information is available: a. The company estimates that P126,000 is the maximum amount of collectible for the accounts receivable. b. Except for 20% of the inventory items that are damaged and worth only P4,000, the cost of other items is expected to be recovered in full. c. The land and building have a combined appraisal value of P340,000 and are subject to the P300,000 mortgage and related accrued interest. d. The appraised value of the machinery is P40,000. Compute the following: How much is the net free assets? How much is the total unsecured liabilities with priority? How much is the total unsecured liabilities without priority? Compute the estimated settlement per peso of unsecured creditors.
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