Andrix Asterix Co.

Statement of financial position

As of December 31, 20x0

ASSETS

Current assets:

Cash - 160,000

Accounts receivable - 880,000

Note receivable- 400,000

Inventory- 2,120,000

Prepaid assets- 40,000

=3,600,000

Noncurrent assets:

Land - 2,000,000

Building, net- 8,000,000

Equipment, net- 1,200,000

=11,200,000

Total assets

14,800,000

LIABILITIES AND EQUITY

Current liabilities:

Accrued expenses- 884,000

Current tax payable- 1,400,000

Accounts payable- 4,000,000

= 6,284,000

Noncurrent liabilities:

Note payable (secured by equipment)- 1,200,000

Loan payable (secured by land and building) 8,000,000

=9,200,000

Capital deficiency:

Share capital 2,000,000

Retained earnings (deficit) (2,684,000)

=(684,000)

Total liabilities and equity- 14,800,000

Additional information:

The following information was determined before the commencement of the liquidation process:

a. Only 76% of the accounts receivable is collectible.

b. The note receivable is fully collectible. An accrued interest receivable of 40,000 was not yet recorded.

c. The inventory has an estimated selling price of 1,680,000 and estimated costs to sell of 40,000.

d. The prepaid assets are non-refundable.

e. The land and building have fair values of 8,000,000 and 3,200,000, respectively. However, Andrix Asterix Co. expects to sell both the land and building for a total selling price of 10,400,000. Costs to sell the land and building are negligible as the prospective buyer agrees to shoulder all necessary costs of transferring title to the property.

f. The equipment is expected to be sold at a net selling price of 800,000.

g. Administrative expenses expected to be incurred during the liquidation process is 120,000. This amount is not yet reflected on the statement of financial position.

h. Accrued expenses include accrued salaries of 100,000.

i. Accrued interest on the loan payable amounting to 60,000 was not reflected in the statement of financial position.

j. All of the other liabilities are stated at their expected settlement amounts.

1. How much are the total assets pledged to fully secured creditors?

a. 11,200,000 b. 12,000,000 c. 10,400,000 d. 0

2. How much are the total assets pledged to partially secured creditors?

a. 800,000 b. 3,140,000 c. 1,200,000 d. 400,000

3. How much are the total free assets?

a. 2,788,800 b. 5,248,800 c. 4,048,800 d. 2,908,800

4. How much are the total net free assets?

a. 3,682,800 b. 4,048,800 c. 2,908,800 d. 3,628,800

5. How much are the total unsecured liabilities with priority?

a. 1,620,000 b. 220,000 c. 1,520,000 d. 100,000

6. How much are the total fully secured creditors?

a. 8,000,000 b. 8,060,000 c. 8,800,000 d. 9,620,000

7. How much are the total partially secured creditors?

a. 1,200,000 b. 1,260,000 c. 2,820,000 d. 3,920,000

8. How much are the total unsecured liabilities without priority?

a. 4,784,000 b. 4,884,000 c. 4,904,000 d. 5,184,000

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

a. 1,655,200 b. 1,555,200 c. 1,380,200 d. 1,456,200

10. What is the estimated recovery percentage of unsecured creditors without priority?

a. 75.85% b. 31.71% c. 70% d. 24.15%

11. How much can the shareholders expect to recover from their equity interests?

a. 483 ,000 b. (478,800) c. (165,186) d. 0