The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company. The statement of affairs for the year ended July 31, 20X1

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Answer 1

Question

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

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Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows Vanous avsets $2,600 000 TOTAL Select one O Prepetition labies fully secured Prepetition ablities subject to comprome Potpetition abiles $2.500.000 TOTAL a $250,000 b. 178,000 Common stock Retained deficit There are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $2.470,000 The creditors represented by the prepetition liabilities subject to compromise agree to take $754,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock. The reorganized company's common stock is valued at $130,000 d$650.000 $520,000 1,768,000 1,066.000 260.000 (1014000) $2600000

Liquidation Southwestern Wear Inc. has the following balance sheet: Current assets $1,875,000 Accounts payable $ 375,000 Fixed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total debt $1,875,000 Common equity 1,875,000 Total assets $3,750,000 Total liabilities & equity $3,750,000 The trustee's costs total $310,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total $2.7 million is received from sale of the assets? Round your answers for monetary values to the nearest dollar and for percentage values to the nearest whole number. If your answer is zero, enter "0". Enter your answers as positive values. Distribution of proceeds on liquidation: Proceeds from the sale of assets 24 Less: 1. First mortgage (paid from the sale of fixed assets) 2. Fees and expenses of…

Answer 2

Question

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

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Answer 3

Question

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

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Answer 4

Question

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

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Answer 5

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

Answer 6

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

Answer 7

Chapter 20, Problem 20.7P

(a)

To determine

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

Answer 8

(a)

Expert Solution

Answer to Problem 20.7P

Statement of Activities for the year ended July 31, 20X1

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Assets pledged with fully secured creditors:
50,000		Accounts receivable (net)	50,000
		Less: 12% note payable and interest	(44,000)	6,000

8,000		Land	110,000		30,000
162,000		Plant and Equipment (net)	150,000		(12,000)
			260,000
		Less: mortgages payable and interest	(234,600)	25,400

	2	Assets pledged with partially secured creditors:
30,000		Marketable securities:	22,000		(8,000)
		Less: 10% note payable and interest	29,400

79,000		Inventory	75,000		(4,000)
		Less: accounts payable	(105,000)

	3	Free assets:
5,000		Cash	5,000	5,000
55,000		Accounts receivables	51,000	55,000
81,000		inventory	76,000	76,000	(5,000)
7,000		Prepaid insurance	1,500	1,500	(5,500)
250,000		Plant and equipment (net)	190,000	190,000	(60,000)
72,000		Franchises	30,000	30,000	(42,000)

		Estimated amount available		388,900
		Less: creditors with priority		(45,000)
		Net amount available to unsecured creditors		343,900
		Add: estimated deficiency		82,500
871,000					(106,500)
		Total unsecured debt		426,400

Book value (in $)	S.No	Particulars	Estimated current values	Estimated amount available to unsecured claims	Estimated gain (loss) on realization
	1	Fully secured creditors:
44,000		12% note payable and interest		44,000
234,600		Mortgages payable		234,600
				278,600
8,000	2	Partially secured creditors:
162,000		10% note payable and interest		29,400
		Less: marketable securities:		22,000	7,400

105,000		Accounts payable		105,000
		Less: inventory		(75,000)	30,000

	3	Creditors with priority:
		Estimated liquidation expenses		13,000
20,000		Wages payable		20,000
12,000		Taxes payable		12,000
		Total		45,000

	4	Unsecured creditors:
160,000		Accounts payable			160,000
212,000		Notes payable			212,000
17,000		Interest payable			17,000

	5	Stakeholders equity
240,000		Common stock
(203,000)		Retained earnings
					426,400

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

The amount of creditors with priority is determined in the equity section of the statement. The estimated amount available to unsecured claims is determined by adding all the amount of free assets, interest on notes payable, and interest on mortgage payable.

Answer 13

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The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company. The statement of affairs for the year ended July 31, 20X1

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Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1

Answer to Problem 20.7P

Explanation of Solution

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Chapter 20 Solutions

The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company. The statement of affairs for the year ended July 31, 20X1

Videos

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company. The statement of affairs for the year ended July 31, 20X1

Answer to Problem 20.7P

Explanation of Solution

Want to see more full solutions like this?

Chapter 20 Solutions

Introduction: The statement of affairs is an important document or disclosure at the time of insolvency proceedings. It represents an overview of the amount of assets and liabilities of the company.

The statement of affairs for the year ended July 31, 20X1