CHAPTER 7-Corporations in Financial Difculty: Liquidation 7-1 The Metro Bank loaned P40,000 to Ilocano Company. Company. The loan is secured by inventory with a book and air value o P!0,000 and P"0,000, respectively. #hat amount will the bank receive i unsecured creditors receive $!% o their claims& a. b. c. d.
P'0,00 ,000 P"0,00 ,000 P"$,!00 P40,00 ,000
7-2 The (bra Company owes P$00,000 P$00,000 on a note payable plus P),000 in interest interest to its bank. The note is secured by inventory with a book value o P'*0,000 and a air value o P'$0,000. #hat amount will the bank received i unsecured creditors receive +!% o their claims& a. b. c. d.
P'$0 $0,0 ,00 00 P'*0 *0,0 ,00 00 P')0,000 P')* )*,0 ,00 00
7- The ed ed Company owes P'!,000,000 P'!,000,000 on the mort-a-e o its buildin- to City Bank. Bank. The buildin- has a net book value o P$0,000,000 and a air value o P'),000,000. #hen ed company le or li/uidation, it owed interest o P0,0001 when the buildin- is sold or P'),000,000, the interest due on the mort-a-e is P$00,000. #hat amount will the bank receive i the unsecured creditors received )0% o their claims& a. b. c. d.
P'!,0 P'!, 000 00,0 ,00 00 P'!, P' !,' '*0 *0,0 ,00 00 P'!, P' !,' '+) +),0 ,00 00 P'!,$00,000
!s" t#" $ollo%in& $or it"'s 7-( and 7-): #hen the Pasi- Company led or li/uidation with 2ecurities and 3chan-e Commission, it prepared the ollowin- balance sheet5 Current assets 6net 6 net realizable value, P50,0007 P50,000 7 8and and buildin- 66fair fair value, P240,0007 P240,000 7 9oodwill 6fair 6fair value, 07 07 Total Total assets assets (ccounts payable Mort-a-e payable 6secured 6 secured by land and building7 building7 Common stock etained earnin-s 6decit 6decit 7 Total Total 7-( a. b. c. d. 7-) a. b. c. d. 7-*
P)0,000 $00,000 40,000 P"$0,000 P"$0,000 P'*0,000 $00,000 '00,000 6'40,0007 P"$0,000 P"$0,000
#hat is the estimated deciency to unsecured creditors& P+0,0 ,00 00 P0,00 ,000 P'$0,000 P'40 40,0 ,00 00 #hat percenta-e o their claims are the unsecured creditors likely to -et& 4".+!% !0% !*.$!% '00% ( company is to be li/uidated and has the ollowin- liabilities5 Income taes
P),000
:otes payable 6secured by land7 (ccounts payable 2alary payable 6evenly to two employees7 Bonds payable (dministrative epense or li/uidation The company has the ollowin- assets5 Current assets 8and Buildin- and e/uipment
'$0,000 )",000 *,000 +0,000 $0,000
Book Value P )0,000 '00,000 '00,000
Fair Value P "",000 0,000 ''0,000
;ow much will the holders o notes payable collect ollowin- the li/uidation& a. b. c. d.
P'0),000 P )",000 P 0,000 P'$0,000
7-7 Cebuano Company has had severe nancial dither assets 8iabilities with priority ?nsecured creditors
P''*,000 !0,000 )0,000 4$,000 $00,000
In li/uidation, how much would be paid to the partially secured creditors& a. b. c. d. 7-+
P'"0,000 P !0,000 P +4,000 P$00,000 The Moon Company has the ollowin-5 ?nsecured creditors 8iabilities with priority 2ecured liabilities5 @ebt one, P$'0,0001value o pled-ed asset @ebt two, P'+0,0001value o pled-ed asset @ebt three, P$'0,0001value o pled-ed asset
P $"0,000 ''0,000 ')0,000 '00,000 '40,000
The company also has a number o other assets that are not pled-ed in any way. The creditors holdin- debt two want to receive at least P'4$,000. Aor how much do these ree assets have to be sold so that debt two would receive eactly P '4$,000& a. b. c. d.
P"0),000 P'),000 P"40,000 P""0,000
!s" t#" $ollo%in& $or it"'s 7-, and 7-1: The ollowin- are data provided by Trinity Company5 (ssets at book value (ssets at net reali=able value 8iabilities at book value5 Aully secured mort-a-e ?nsecured accounts and notes payable ?nrecorded liabilities5 Interest on bank notes
P'00,000 +!,000 40,000 4!,000 $!0
3stimated administrative epense ( trustee is appointed to li/uidate the company.
4,000
7-, The ournal entry made by the trustee to record the assets and liabilities should include an estate e/uity 6decit7 o5 a. b. c. d.
P'4,$!0 P'4,000 P'0,$!0 P'0,000
7-1 The statement o aairs prepared by the trustee at this time should include an estimated deciency to unsecured creditors o5 a. b. c. d.
P"!,000 P"',000 P'4,$!0 P'0,000
7-11 The
