: Accounting for Receivership 

The balance sheet of SAINT LAWRENCE ENTERPRISES at

June 10, 2021 follows. At this date an interim trustee was

appointed by the court to assume control of SAINT

LORENZO's estate and liquidate the distressed corporation.

Cash

Accounts receivable

P 15,360

30,720

Inventories 138,240

Land 76,800

Buildings, net 384,000

Intangible assets 99,840

Total P744,960

Accounts payable P 192,000

Notes payable 153,600

Deferred revenue 3,840

Wages payable 11,520

Mortgage note payable 307,200

Capital stock 153,600

Retained earnings, deficit (76,800)

Total P744,960

Additional information:

1. The land and the buildings are pledged as security for

the mortgage payable.

2. In June, 2021, SAINT LAWRENCE received P3,840 from

a customer as payment in advance for merchandise

that is no longer marketed and thus can no longer be

provided.

3. Activities of the trustee during June are summarized as

follows:

a. P27,648 is collected on the receivables.

b. Inventories are sold for P74,496.

c. Land and buildings bring total of P384,000.

d. Nothing is realized from the intangible assets.

e. Administrative expenses of P31,488 are incurred

by the trustee.

REQUIRED:

1. Prepare journal entries in the books of the trustee and

in the books of the distressed company for the above

transactions.

2. Prepare statement of realization and liquidation using

the conventional method..

3. Discuss briefly and illustrate how the realization of

non-cash asset is accounted for under the book value

method.