Hello tutors, may I ask for a detailed solution and explanation for this? Thank you.

TANG-A Company filed a voluntary bankruptcy petition on August 15, 2017 and the statements of affairs reflect the following amounts:

Book Value Fair Value

Assets pledged to fully secured creditors P 156,250 P 578,125 Assets pledged to partially secured creditors 281,250 187,500 Free assets 656,250 500,000 P 1,093,750 P 1,265,625

Liabilities with priority P 109,375

Fully secured liabilities 406,250

Partially secured liabilities 312,500

Unsecured liabilities 843,750

P 1,671,875

7. Assume that the assets are converted into cash at the estimated fair value and the business is liquidated, how much is the estimated deficiency to unsecured creditors?

a. 575,125

b. 406,250

c. 171,875

d. No deficiency