1. A company enters Chapter 7 bankruptcy proceedings. Its balance sheet, prepared using GAAP for a company with continuing operations, is as follows: Cash $ 15,000 Accounts payable $ 90,000 Inventories 100,000 Loans payable 300,000 Plant and equipment, net 250.000 Equity (deficit) 25.000) Total $365.000 Total $365.000 The plant and equipment is security for one of the loans, with a balance of $130,000. The other liabilities are unsecured. The following transactions occur. # # # Inventories with a book value of $60,000 were sold for $40,000. The plant and equipment was sold for $200,000. The loan secured by the plant and equipment was paid. Wages and administrative expenses of $10,000 were accrued. An initial payment of 40 cents per dollar of indebtedness was paid to the unsecured creditors. The statement of realization and liquidation reports total "assets not realized" of: C A. $ 40,000 C B. $ 60,000 C. $ 61,000 D. $150,000 2. A company enters Chapter 7 bankruptcy proceedings. Its balance sheet, prepared using GAAP for a company with continuing operations, is as follows: Cash 6 15,000 Accounts payable $ 90,000 Inventories 100,000 Loans payable 300,000 Plant and equipment, net 50,000 Equity (deficit) 25.000) Total $365,000 Total $365,000 The plant and equipment is security for one of the loans, with a balance of $130,000. The other liabilities are unsecured. The following transactions occur. Inventories with a book value of $60,000 were sold for $40,000. The plant and equipment was sold for $200,000. The loan secured by the plant and equipment was paid. Wages and administrative expenses of $10,000 were accrued. An initial payment of 40 cents per dollar of indebtedness was paid to the unsecured creditors. The statement of realization and liquidation reports total "assets to be realized" of: A. $350,000 B. $240,000 C C. $365,000C D. $260,000 3. Givingup Company is entering bankruptcy under Chapter 7 of the bankruptcy laws. The following information is available: Realizable value of assets pledged to fully-secured creditors $600,000 Realizable value of assets pledged to partially-secured creditors 350,000 Realizable value of unsecured asset 282,500 Liabilities, fully secured 500,000 Liabilities, partially secured 00,000 Liabilities, unsecured with priority 50,000 Liabilities, unsecured 400.000 Givingup's statement of affairs reports an estimated deficiency to unsecured creditors Of. C A. $400,000 C B. $617,500 C. $332,500 C D. $500,000 4. A company emerging from Chapter 11 reorganization has the following balance sheet: Cash $ 25,000 Postpetition liabilities $ 200,000 Accounts receivable 60,000 Liabilities subject to compromise 1,500,000 Inventories 100,000 Common stock 300,000 Plant and equipment, net .200.000 Retained deficit 315.000) Total $1,685,000 Total $1,685,000 The plan of reorganization provides for the following: * Estimated reorganization value is $1,300,000. Liabilities subject to compromise are replaced with $1,000,000 in notes payable and 80% of the new common stock issue. Existing shareholders receive 20% of the new stock issue Inventories and plant and equipment are written down to their fair values of $250,000 and $800,000, respectively. There are no previously unreported identifiable intangible assets. In the entry to record revaluation of assets, the loss on asset revaluation is: C A$ 550,000C B. $1,050,000 C. $ 875,000 C D.$ 385,000 5. Hopeful Company's balance sheet is as follows: Hopeful Company Balance Sheet, pre-quasi-reorganization Assets Liabilities and Equity Cash $ 60,000 Loans payable $1,220,000 Inventories 550,000 Common stock, $10 par 550,000 Property (net) 950,000 Additional paid-in capital 00,000 Retained earnings (610,000) Total $1,560,000 Total $1,560,000 The company enters into a quasi-reorganization. Pursuant to this plan, inventories are written down by $50,000 and property is reduced by $180,000. The par value of the common stock is reduced to $2/share. At the completion of the quasi-reorganization process, the balance in the common stock, $2 par account is: C A. $ 55,000 C B. $1 10,000 C C. $550,000 D.$440,000