Hi tutor, may I ask for a detailed solution and explanation for this? Thank you. The AFAR Corporation, which is undergoing liquidation, has the following condensed balance sheet as of December 31, 2017:

Assets Liabilities and Shareholders' Equity Cash and cash equivalents P 1,584,000 Salaries payable P 480,000 Receivables, net 3,696,000 Accounts payable 660,000 Inventory 924,000 Bonds payable 680,000 Prepaid expenses 252,000 Bank loan payable 5,200,000 Equipment, net 2,800,000 Notes payable 2,376,000 Furniture 800,000 Ordinary shares 960,000 Goodwill 240,000 Deficit ( 60,000) TOTAL P 10,296,000 TOTAL P 10,296,000Additional information:

The bonds payable above was secured by the furniture with realizable amount of P720,000 while the entire receivable with realizable amount of P3,600,000 has been the collateral for bank loan payable. Notes payable was secured by equipment with realizable amount of P2,376,000.

Inventory could be sold for P804,000.

Liquidation expenses incurred by the trustee amounted to P80,000 and unrecorded tax payable amounted to P60,000.

1. How much is the net free assets?

a. 2,388,000

b. 1,768,000

c. 1,808,000

d. 2,428,000

2. How much is the estimated deficiency to unsecured creditors?

a. (452,000)

b. (492,000)

c. (425,000)

d. No deficiency since assets are greater than liabilities

3. What is the estimated net gain/ (loss) on realization of assets?

a. (1,212,000)

b. (720,000)

c. (960,000)

d. 972,000

4. How much is the estimated payment to partially secured creditors?

a. 3,600,000

b. 4,160,000

c. 1,280,000

d. 4,880,000

5. What is the estimated recovery percentage for unsecured without priority liabilities? a. 100%

b. 80%

c. 78.23%

d. 93.85%

6. What is the estimated recovery percentage for partially secured liabilities?

a. 100%

b. 80%

c. 78.23%

d. 93.85%

Thank you very much.