Total free assets Net free assets Unsecured liabilities with priority
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Using the data, compute the following:
- Total free assets
- Net free assets
- Unsecured liabilities with priority
- Unsecured liabilities without priority
- Estimated recovery percentage
- Net gain (loss) on realization
- Estimated deficiency
- Net income (loss) on realization and liquidation
- Amount paid to partially secured creditors
- Amount paid to unsecured creditors without priority
- Total estimated payment to creditors
- 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
Cash
Accounts Receivable
Note Receivable
Inventory
Prepaid Expenses
Land and Building
Equipment, net
P5,400
78,700
37,000
175,700
1,900
122,500
97,600
Accounts Payable
Notes Payable – PNB
Notes Payable - suppliers
Accruedwages
Accruedtaxes
P105,000
30,000
102,500
3,700
9,300
180,000
150,000
(61,700)
P518,800
Mortgage Bonds Payable
Common stock-P100 par
Retained Earnings
Total Liabilities & Equity
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 PhilippineNational Bank.
b. Inventories are expectedto bring in P90,200when soldunder bankruptcyconditions.
Landand buildingshave an appraised value of P190,000. They serveas security on the bonds.
d. The currentvalue of the equipment, net of disposal costis P18,000.
e. Estimated legal and accounting fees for the liquidation are P2,000.
c.
f.
Unrecorded interest on notes payableto supplier amountsto P1,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education