Topic: Corporate Liquidation

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Answers: 1. C 2.B 3.A 4. UNKNOWN 5. C 6.D 7. B 8. C 9. C 10.C 11.D 12. B

The foliowing balances were ascertained in NOMONEY Cor . which is experiencing insolvency: Cash P8,000 Accounts a able P80,000 Notes receivable 120,000 Accrued expenses 30,000 Inventories 80,000 Salaries payable 15,000 Prepaid expenses 10,000 Mortgage payable 155,000 Equipment, net 150.000 Ordinary shares 100,000 Decit (12,000) Total P368,000 Total P368,000 Additional information: Estimated net realizable value of the notes receivable was P101000 and was pledged to the mortgage payable. 80% of the book values of the inventories can be sold at P45,000 and was pledged to 60% of the accounts payable. o The remaining book value of the inventories have an estimated fair value of P20,000. - 80% of the remaining unpaid accounts payable were secured by the equipment having an estimated fair value of P60.000. Prepaid expenses has no estimated fair value. Liquidation and administration expenses were estimated in the amount of P8,000. Income tax payable had been accrued in the amount of P2,000 (the accountant recorded it using the accrued expense account) 0 Interest on the notes receivable and mortgage payable have not been accrued in the amount of P10,000 and P15,000 respectively. 1. How much is the estimated deciency? A. P61.400 B. P40,000 C. P55,000 D. P46,400 2. How much is the estimated payment to the mortgage payable? A. P52,400 B. P37.400 C. P31.000 D. P46.000 3. How much [5 the estimated payment to the mortgage payable? A. P131264 B. P146,191 C. P133,453 D. P142379 4. How much is the estimated recovery percentage to the partially secured accounts payable? A. 97.29% B. 95.85% C. 96.28% D. 96.86% Cagayan Company is experiencing financial problems which resulted to ultimate bankruptcy. The statement of financial position of the entity before liquidation is presented below: Cash P100,000 Income tax payable P200,000 Inventory 300,000 Salaries payable 300,000 Land 200,000 Note payable 800,000 Mortgage payable 100,000 Accounts payable 400,000 Contributed capital 500,000 Deficit (1,700,000) The note payable is secured by the inventory with net realizable value of P250,000. The mortgage payable is secured by the land with fair value of P120,000. 5. What is the amount received by the holder of the note payable at the end of corporate liquidation? A. P320,000 B. P300,000 C. P250,000 D. P260,000 6. What is the amount received by the holder of the mortgage payable at the end of corporate liquidation? A. P120,000 B. P200,000 C. P150,000 D. P100,000 7. What is the amount received by the employees at the end of corporate liquidation concerning their salaries? A. P100,000 B. P120,000 C. P72,000 D. P300,000Bancarote Inc. is under court-supervised liquidation due to its insolvency. The court appointed liquidator has provided the following data after conducting an inventory of Bancarote's assets and liabilities: The total assets which are not used as security for any liability amounted to P5,000,000 while the total unsecured liabilities amounted to P20,UUU,000. The total assets which are used as collateral or security for corporate obligations amounted to P10,000,DOO. 3:6 of these assets secure a mortgage payable with book value of P2,000,000 including interest while the remainder secure a note payable with book value of P35009000 including interest. Salaries payable amounted to P2,000,000 while taxes due government amounted to P1,000,000. What is the estimated recovery percentage of unsecured creditors without priority? A. 25% B. 37.5% C. 41.67% D. 52.5% What is the amount received by partially secured creditors? A. P2,?50,000 B. P2,875,000 C. P2316300 D. P3,025.000 Liberty Corporation provided the following balances on Jul 1, 20x20: I Cash P5,500 Accounts payable P59,500 | Accounts receivabie 35,000 Wages payable 25,000 | Inventories 60,000 Tax payable 35,000 | Notes receivable 78,000 Note payable 65,000 | Equipment 256,000 Mortgage payable 175,000 | Share capital 120,000 | Decit (45 09.) Total P434 500 Total P434 500 In the statement of realization and liquidation the following data are ascertained for the month of July: The note payable and mortgage payable together with their respective interest are paid. Only TUB is collected from the existing accounts receivable at the beginning of the month. Half of the inventories were sold for P45,000. Only P68,500 of the notes receivable is collected. Equipment is sold for P225,000. Administrative expenses of P13,800 are paid. Additional credit sales amounting to P10.500 are made for the remaining inventories. Interest not accrued for the month are note receivable P1.500, note payabie P5,500 and mortgage payable P10.500. - All existing noncash assets at the beginning of the month are sold or collected during the month. 10. How much is the profit or loss in the statement of realization and liquidation? A. (P42,475) B. P27,975 C. {P77,675} D. P75,175 11. How much is the estate equity at July 31, 20x20? A. (P102375) B. P32,525 C. P150,175 D. (P2,67S) 12. Finish Corporation has been undergoing liquidation since January 1. Its condensed statement of realization and liquidation for the month of June is presented below: Interest received in cash on investment P10,500 Purchases on account 105,000 Liabilities liquidated 2,450,000 Assets realized 2,100,000 Payment of expenses of trustee 525,000 Liabilities to be liquidated, June 1 4,574,500 Sales on account 50,000 Assets to be realized, July 1 2,940,000 Liabilities not liquidated, June 30 2,229,500 Sales for cash 1,750,000 Assets not realized, May 31 6,650,000 What is the net gain (loss) on realization and liquidation? A. P1,225,000 B. (P479,500) C. (P1,225,000) D. P479,500 Page | 2