1.Big Co's financial position prior to liquidation is as follows:

Assets:

Cash 80,000

Accounts receivable 440,000

Note receivable 200,000

Inventory 1,060,000

Prepaid assets 20,000

Land 1,000,000

Building, net 4,000,000

equipment, net 600,000

Total 7,400,000

Liabilities and Equity

Accrued expenses 442,000

current tax payable 700,000

Accounts payable 2,000,000

Note payable 600,000

Loan payable 4,000,000

Share capital 1,000,000

Retained Earnings(deficit) (1,342,000)

Total 7,400,000

Additional Info:

a. 24% of the accounts receivable is uncollectible

b. the note is fully collectible. In addition, 20,000 interest is expected to be received.

c. the inventory's estimated selling price and costs to sell are 840,000 and 20,000, respectively

d. prepaid assets are non-refundable

e. the land and building, which are pledged as securities for the 4,000,000 loan, are expected to be sold at a package price of 5,200,000. An additional 30,000 is expected to be paid for the interest on the loan

f. the equipment, which has a net selling price of 400,000 is pledged as security for the note payable

g. admin expense 60,000 are expected to be incurred in the liquidation process

h. the accrued expenses include salaries payable of 50,000

i. the other liabilities are expected to be settled equal to their carrying amounts

Requirements:

a. Prepare the Statements of Affairs

b. How much is the estimated deficiency?

c. How much is the estimated recovery percentage of unsecured creditors without priority

d. Mr. A supplier, has an outstanding account receivable of 500,000from big co. How much can mr. A expect to recover from his claim?

2.Sunday Co's financial position before the start of its liquidation is as follows:

Assets

Cash 100,000

Accounts receivable 600,000

Inventory 1,560,000

land 800,000

building 1,200,000

equipment, net 400,000

Total 4,660,000

Liabilities and Equity

Accounts Payable 1,600,000

Income tax payable 900,000

note payable(secured by equipment) 1,000,000

loan payable (secured by land and building 1,200,000

share capital 2,000,000

Retained earnings (deficit) (2,040,000)

Total 4,660,000

Additional Info:

-only 60% of the accounts receivable is collectible

-the entire inventory is expected to be sold half the price

-the land and building are expected to be sold at lump sum price of 2,300,000

-the equipment is expected to be sold at its carrying amount but after refurbishment costs of 70,000

-certain accounts payable are measured gross of 23,000 cash discount which Sunday intends to take . A supplier waived repayment of 420,000 account

-the taxing authority gave sunday a six month tax amnesty to settle the tax liability for 780,000

-interest of 80,000 and 70,000 are expected to be paid on the note and loan, respectively.

-liquidation cost of 120,000 are expected to be incurred

-SSS, PhilHealth and Pag ibig contributions of 160,000 not reflected on the balance sheet above , are expected to be paid

Questions:

1.How much is the estimated deficiency to unsecured creditors without priority?

a.) 567,000 b.)697,000 c.) 767,000 d.)817,000

2.how much are the net free assets?

a.)1,210,000 b.)1,570,000 c.)1,907,000 d.)2,270,000

3.how much total amount can the issuer of the note payable expect to receive?

a.)693,018 b.)729,078 c)805,875 d.)908,127

4.Mr. A, an unsecured creditor without priority. has a claim of 80,000. How much can Mr. A expect to recover on his claim?

a.)33,513 b.)45,135 c.)49,260 d.)50,760

Finished Co. is undergoing liquidation. The statement of affairs shows the following info:

Assets - Carrying amount - Realizable Value

Assets pledged to fully secured creditors- 160,000 - 190,000

Assets pledged to partially secured creditors -90,000 - 60,000

Free assets - 200,000 - 140,000

total - 450,000 - 390,000

Liabilities - Carrying amount - Realizable Value

Liab wih priority - 20,000 - 20,000

Fully secured creditors - 130,000 - 130,000

Partially secured creditors - 100,000 - 100,000

Unsecured creditors - 260,000 - 260,000

Total 510,000 - 510,000

5.if all assets were sold at their realizable values and all the liabilities were settled at their expected settlement amounts, how much will the partially secured creditors receive?

a.) 76,000 b.)84,000 c.)96,000 d.)104,000

6.If all the assets were sold at their realizable values and all the liabilities were settled at their expected settlement amounts, how much will the unsecured creditors receive?

a.)84,000 b.)96,000 c.)124,000 d.)156,000

7.Paramount Co's statement of affairs shows a 65% expected recovery of unsecured creditors without priority, which consists of accounts payable with carrying amount of 800,000. The accountants working papers show the following:

Suppliers - balances - notes

Athena Co. - 600,000 - waived repayment of 100,000

Riley Co.- 80,000 - to be cancelled upon return of the goods

Naia Co. - 120,000 - rebate of 50,000 is available

Total- 800,000

How much is the net free assets?

a.)370,499 b.)610,245 c.)422,500 d.)1,000,000

Rainy Co financial position before its liquidation is as follows:

Assets

Cash 100,000

Accounts receivable 600,000

Inventory 900,000

Equipment, net 400,000

total 2,000,000

Liab and Equity

Accounts payable 1,600,000

Loan payable 1,500,000

Share Capital 2,000,000

Retained Earnings (deficit) (3,100,000)

total 2,000,000

Transactions in the first quarter of liquidation are as follows:

-90% of the accounts receivable were collected. Commission of third party collectors amounted to 108,000. The collectors expect to collect the remaining receivables in the next quarter.

-Half of the inventory was sold at 80% of carrying amount. The other half is expected to be sold at 60% of carrying amount.

-the equipment was sold for 380,000 after it was refurbished for 50,000

-100,000 accounts payable were paid

-employee termination benefits of 100,000 were recorded and 80,000 of that amount were paid

-the lender accepted 1,000,000 as full payment of the loan

-the liquidation costs of 50,000 were paid

-scrap materials from clearing the warehouse were sold for 10,000.

8.How much assets realized is presented on Rainy's Statement of realization and liquidation?

a.)1,122,000 b.)1,212,000 c.)1,312,000 d.)1,321,000

9.How much net gain (loss) is reported on Rainy's statement of realization and liquidation?

a.)178,000 b.) (178,000) c.)192,000 d.) (192,000)

10.How much is the ending balance of cash?

a.)1,800 b.)2000 c.)5,000 d. 0