The Walston Company is to be liquidated and has the following liabilities:$ 11,800128,00089,000Income taxesNotes payable (secured by land)Accounts payableSalaries payable (evenly divided betweentwo employees)Bonds payableAdministrative expenses for liquidation8,00074,00024,000The company has the following assets:ВookFairValueValueCurrent assets$ 84,000104,000104,000$ 39,00094,000123,000LandBuildings and equipnentHow much money will the holders of the notes payable collect following liquidatio

A firm is said to be in liquidation when its assets are sold, it stops doing business, and it is…

Answered: The Walston Company is to be liquidated…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:ASSETSCarryingAmountNet RealizableValueCash P250,000 P300,000Accounts Receivable 150,000 355,649Equipment-net 600,000 200,000Land 1,700,000 1,500,000TOTAL ASSETS P2,700,000 P2,355,649LIABILITIESCarryingAmountSettlementAmountAccounts Payable P1,000,000 P1,000,000Salaries Payable 500,000 500,000Notes Payable 800,000 805,234Loan Payable 800,000 800,000TOTAL LIABILITIES P3,100,000 P3,105,234EQUITYShare Capital P1,600,000Retained Earnings (2,000,000)Capital Deficiency (400,000)TOTAL LIABILITIES & EQUITY P2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidationprocess.• The equipment is pledged to the loan payable.• The land is pledged to the notes payable.QUESTIONS:1. What is the amount paid to unsecured creditors without priority? 2. What is the amount paid to partially secured creditors?
Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:ASSETSCarryingAmountNet RealizableValueCash P250,000 P300,000Accounts Receivable 150,000 355,649Equipment-net 600,000 200,000Land 1,700,000 1,500,000TOTAL ASSETS P2,700,000 P2,355,649LIABILITIESCarryingAmountSettlementAmountAccounts Payable P1,000,000 P1,000,000Salaries Payable 500,000 500,000Notes Payable 800,000 805,234Loan Payable 800,000 800,000TOTAL LIABILITIES P3,100,000 P3,105,234EQUITYShare Capital P1,600,000Retained Earnings (2,000,000)Capital Deficiency (400,000)TOTAL LIABILITIES & EQUITY P2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidationprocess.• The equipment is pledged to the loan payable.• The land is pledged to the notes payable.QUESTIONS:1. How much are the total free assets? _____________2. How much are the unsecured liabilities with priority? _____________3. How much are the…
The Walston Company is to be liquidated. It has the following liabilities: Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation The company has the following assets: $ 7,600 136,000 93,000 14,000 78,000 28,000 Book Value Fair Value Current assets $ 88,000 Land 108,000 Buildings and equipment 108,000 $ 43,000 98,000 132,000 Required: How much money will the holders of the notes payable collect following liquidation? Total amount collected
Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:ASSETSCarrying AmountNet Realizable ValueCash P250,000 P300,000Accounts Receivable 150,000 355,649Equipment-net 600,000 200,000Land 1,700,000 1,500,000TOTAL ASSETS P2,700,000 P2,355,649LIABILITIESCarrying AmountSettlement AmountAccounts Payable P1,000,000 P1,000,000Salaries Payable 500,000 500,000Notes Payable 800,000 805,234Loan Payable 800,000 800,000TOTAL LIABILITIES P3,100,000 P3,105,234EQUITYShare Capital P1,600,000Retained Earnings (2,000,000)Capital Deficiency (400,000)TOTAL LIABILITIES & EQUITY P2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process.• The equipment is pledged to the loan payable.• The land is pledged to the notes payable.QUESTIONS:1. How much are the total free assets? _____________2. How much are the unsecured liabilities with priority? _____________3. How much are…
Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:ASSETSCarrying AmountNet Realizable ValueCash P250,000 P300,000Accounts Receivable 150,000 355,649Equipment-net 600,000 200,000Land 1,700,000 1,500,000TOTAL ASSETS P2,700,000 P2,355,649LIABILITIESCarrying AmountSettlement AmountAccounts Payable P1,000,000 P1,000,000Salaries Payable 500,000 500,000Notes Payable 800,000 805,234Loan Payable 800,000 800,000TOTAL LIABILITIES P3,100,000 P3,105,234EQUITYShare Capital P1,600,000Retained Earnings (2,000,000)Capital Deficiency (400,000)TOTAL LIABILITIES & EQUITY P2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process.• The equipment is pledged to the loan payable.• The land is pledged to the notes payable. QUESTIONS: 4. How much are the net free assets? _____________5. What is the estimated deficiency? _____________6. What is the estimated recovery…
Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:ASSETSCarrying AmountNet Realizable ValueCash P250,000 P300,000Accounts Receivable 150,000 355,649Equipment-net 600,000 200,000Land 1,700,000 1,500,000TOTAL ASSETS P2,700,000 P2,355,649LIABILITIESCarrying AmountSettlement AmountAccounts Payable P1,000,000 P1,000,000Salaries Payable 500,000 500,000Notes Payable 800,000 805,234Loan Payable 800,000 800,000TOTAL LIABILITIES P3,100,000 P3,105,234EQUITYShare Capital P1,600,000Retained Earnings (2,000,000)Capital Deficiency (400,000)TOTAL LIABILITIES & EQUITY P2,700,000Additional Information:• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process.• The equipment is pledged to the loan payable.• The land is pledged to the notes payable. QUESTIONS: 7. What is the amount paid to unsecured creditors without priority? _____________8. What is the amount paid to partially secured…
A company that Income to be liquidated had the following liabilities: Income taxes - 10,000Notes payable secured by land - 100,000Accounts Payable - 251,050Salaries Payable - 12,950Administrative expenses for liquidation - 20,000 The company has thhe following assets: Current Assets Book Value - 100,000Fair Value - 95,000LandBook Value - 50,000Fair Value - 75,000Building Book Value - 150,000Fair Value - 200,000 Determine the total net free assetsDetermine the total payment to unsecured creditors.
A company that was to be liquidated had the following liabilities: $ 10,400 Income taxes Notes payable (secured by land) Accounts payable Salaries payable to employees ($16,000 for John Jay and $2,800 for Ann Still) Bonds payable Administrative expenses for liquidation 156,000 $107,900 18,800 81,000 26,000 The company had the following assets: Вook Fair Value Value Current assets $104,000 $ 42,900 130,000 Land 117,000 Buildings & equipment 130,000 143,000 Prepare a schedule to show the amount of total liabilities with priority. Short Answer Toolbar navigation BI U S : : E a E V A
Pitch Co. is undergoing liquidation. Infórmation on Pitch Co.. assets and liabilities is shown below: Вook value Realizable value ASSETS 1,000,000 500,000 1,300,000 Assets pledged to fully secured creditors Assets pledged to partially secured creditors 300,000 1,600,000 1,280,000 Free assets 3,100,000 2,880,000 LIABILITIES Unsecured liabilities with priority 400,000 480,000 1,000,000 1,050,000 Fully secured creditors Partially secured creditors Unsecured creditors without priority 650,000 650,000 1,400,000 3,580,000 1,400,000 3,450,000 1. What is the estimated recovery percentage of unsecured creditors without priority? а. 60% b. 75% с. 78% d. 80%
A company that was to be liquidated had the following liabilities: $ 10,400 Income taxes Notes payable (secured by land) Accounts payable 156,000 $107,900 Salaries payable to employees ($16,000 for John Jay and $2,800 for Ann Still) Bonds payable Administrative expenses for liquidation 18,800 81,000 26,000 The company had the following assets: Вook Fair Value value Current assets $104,000 $ 42,900 130,000 Land 117,000 Buildings & 130,000 143,000 equipment Prepare a schedule to show the amount of total unsecured non-priority liabilities. Short Answer Toolbar navigation BI U S : : E E E V
When AAA Company filed for liquidation with the Securities and Exchange Commission, it prepared the following statement of financial position: Current Assets (net realizable value, P50,000) Land and Building (fair value, P240,000) Goodwill (fair value, 0) Total Assets Accounts Payable Mortgage Payable (secured by land & building) Ordinary share Accumulated profits Total Liabilities and Equity b. 56.25% c. 50.00% P 80,000 200,000 d. 43.75% 40,000 P320,000 P160,000 200,000 100,000 What percentage of their claims are the unsecured creditors likely to get? a. 100% (140,000) P320,000
A company that was to be liquidated had the following liabilities: Income taxes $ 10,400 Notes payable (secured by land) Accounts payable 156,000 $107,900 Salaries payable to employees ($16,000 for John Jay and $2,800 for Ann Still) Bonds payable Administrative expenses for liquidation 18,800 81,000 26,000 The company had the following assets: Вook Fair Value Value $104,000 $ 42,900 130,000 Current assets Land 117,000 Buildings & equipment 130,000 143,000 Prepare a schedule to show the amount of total assets available to pay liabilities with priority and unsecured creditors. Short Answer Toolbar navigation BI U S : : > !!!

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