Conpute the loss on asset realization 2. Compute the gain or (loss) on asset realization
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The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The
ASSETS:
Cash P 2,700
Notes Receivable 18,500
Inventories 87,850
Prepaid Expenses 950
Land and Buildings 61,250
Equipment 48,800
Total ?
LIABILITIES AND EQUITY:
Accounts Payable P52,500
Notes Payable - PNB 15,000
Notes Payable - Suppliers 51,250
Accrued Wages 1,850
Accrued Taxes 4,650
Mortgage Bonds Payable 90,000
Common Stock - P 100 par 75,000
Total ?
Additional Information:
▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be collectible. The good notes are pledged to Philippine National Bank (PNB).
▪Inventories are expected to bring in P 45,100 when sold under bankruptcy conditions.
▪Land and Buildings have an appraised value of P 95,000. They serve as security on the bonds.
▪The current value of the equipment, net of disposal cost is P 9,000.
▪Prepaid expenses are nonrecoverable.
▪Estimated legal and accounting fees for the liquidation are P 1,000.
▪Unrecorded interest on notes payable to supplier amounts to P 500.
Requirements:
1. Conpute the loss on asset realization
2. Compute the gain or (loss) on asset realization
Step by step
Solved in 2 steps
- The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The statement of financial position on that date shows: ASSETS:Cash P 2,700Accounts Receivable 39,350Notes Receivable 18,500 Inventories 87,850Prepaid Expenses 950 Land and Buildings 61,250Equipment 48,800 Retained Earnings (30,850)Total ? LIABILITIES AND EQUITY: Accounts Payable P52,500 Notes Payable - PNB 15,000 Notes Payable - Suppliers 51,250 Accrued Wages 1,850 Accrued Taxes 4,650 Mortgage Bonds Payable 90,000 Common Stock - P 100 par 75,000 Total ? Additional Information:▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be…Because of its inability to pay its debts, the KDC Manufacturing Company has been forced into bankruptcy as of June 30, 2021. The Statement of Financial Position on that date shows. Cash Accounts Receivable Notes Receivable Inventories Prepaid Expenses Land and Buildings Equipment ASSETS TOTAL c. 48% d. 50% 5,665 Accounts Payable 39,350 Notes Payable - BPI 18,500 Notes Payable - Suppliers 87,850 Accrued Wages 950 Accrued Taxes 61,250 Mortgage Bond Payable LIABILITIES and EQUITY 48,800 Common Stock - P100 par a. 4,355 b. 4,550 c. 3,120 d. 6,500 P262,365 TOTAL 15. The estimated loss on asset disposition is a. 29,240 b. 112,740 c. 111,790 d. 82,550 16. What is the estimated gain on asset disposition? a. 33,750 b. 41,000 c. 34,700 d. 0 17. The expected recovery percentage is: a. 67% b. 70% Retained Earnings 52,500 15,000 51,250 Additional Information: Only P16,110 of Accounts Receivable and P12,500 of Notes Receivable are expected to be collectible. The good notes are pledged to Bank of…Because of the inability to pay debts, Steven Company has been forced into bankruptcy as of April 30, 2021. The statement of financial position on that date shows: Assets Liabilities P 2,700 Accounts Payable 39,350 Notes Payable - PNB 18,500 Notes Payable - Suppliers 87,850 Accrued Wages 950 Accrued Taxes Cash Accounts Receivable P 52,500 15,000 51,250 1,850 Notes Receivable Inventories Prepaid Expenses Land and Buildings 4,650 61,250 Mortgage Bond Payable 90,000 48,800 Ordinary Share - P100 par Accumulated Profit (Deficit) Equipment 75,000 (30,850) P259,400 P259,400 Accounts receivable of P16,110 and notes receivable of P12,500 are expected to be collectible. The good notes are pledged to Phil. National Bank. Inventories are expected to bring in P45,100 when sold under bankruptcy conditions. Land and building have an appraised value of P95,000. They serve as security on the bonds. The current value of the equipment, net of disposal cost is P9,000. The expected recovery percentage…
- Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts. The statement of financial position on that date shows: ASSETS LIABILITIES & EQUITY P5,400 78,700 37,000 175,700 1,900 122,500 Accounts Payable Notes Payable – PNB Notes Payable – suppliers Accrued wages Accrued taxes Mortgage Bonds Payable Common stock – P100 par Retained Earnings Total Liabilities & Equity P105,000 30,000 102,500 3,700 9,300 180,000 150,000 (61,700) P518,800 Cash Accounts Receivable Note Receivable Inventory Prepaid Expenses Land and Building Equipment, net 97,600 Total Assets P518,800 Additional information: a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good notes are pledged to Philippine National Bank. b. Inventories are expected to bring in P90,200 when sold under bankruptcy conditions. c. Land and buildings have an appraised value of P190,000. They serve as security on the bonds. d. The current value…Down Dog Corporation filed a petition for bankruptcy on June 30, 2014. Data relevant to its financial position as of this date are: Cash Accounts receivable-net Inventories Equipment-net Total assets Accounts payable Rent payable Wages payable Note payable plus accrued interest Capital stock Retained earnings (deficit) Total liabilities and equity Requirements: Book Value P3,000 72,000 60,000 165,000 P300,000 P72,000 21,000 45,000 96,000 180,000 (120.000) P300.000 Estimated Net Realizable Values P3,000 48,000 72,000 87,000 P210,000 1. Prepare a statement of affairs assuming that the note payable and interest are secured by a mortgage on the equipment. 2. Estimate the amount that will be paid to each class of claims if priority liquidation expenses, including trustee fees, are P24,000 and estimated net realizable values are realized.Nissan Corporation is undergoing liquidation. On January 1, 2020 its Statement of Financial Position showed the following accounts: ASSETS Cash P 150,000 Accounts Receivables-net 290,600 Inventory 50,000 Prepaid Expenses 10,400 Building 380,000 Goodwill 80,000 TOTAL P 961.000 LIABILITIES AND EQUITY Salaries Payable P 85,000 Accounts Payable 120,700 Mortgages Payable 428,000 Loan Payable 130,000 Notes Payable 84,300 Ordinary Shares 170,000 Deficit (57,000) TOTAL P961.000 The mortgage payable is secured by the Building having a realizable value of P400,000. Accounts Payable amounting to P75,000 is secured by receivables amounting to P90,600 (P9,900 of which is uncollectible). The balance of receivables which has a realizable value of P187,500 is used to secure the loan payable. Inventory has a realizable value of P41,200. In addition to recorded liabilities are: accrued interest on mortgage payable amounting to P4,280,…
- Nissan Corporation is undergoing liquidation. On January 1, 2020 its Statement of Financial Position showed the following accounts: ASSETS Cash P 150,000 Accounts Receivables-net 290,600 Inventory 50,000 Prepaid Expenses 10,400 Building 380,000 Goodwill 80,000 TOTAL P 961.000 LIABILITIES AND EQUITY Salaries Payable P 85,000 Accounts Payable 120,700 Mortgages Payable 428,000 Loan Payable 130,000 Notes Payable 84,300 Ordinary Shares 170,000 Deficit (57,000) TOTAL P961.000 The mortgage payable is secured by the Building having a realizable value of P400,000. Accounts Payable amounting to P75,000 is secured by receivables amounting to P90,600 (P9,900 of which is uncollectible). The balance of receivables which has a realizable value of P187,500 is used to secure the loan payable. Inventory has a realizable value of P41,200. In addition to recorded liabilities are: accrued interest on mortgage payable amounting to P4,280,…21 Nissan Corporation is undergoing liquidation. On January 1, 2020 its Statement of Financial Position showed the following accounts: ASSETS LIABILITIES AND EQUITY Cash P 150,000 Salaries Payable P 85,000 Accounts Receivables-net 290,600 Accounts Payable 120,700 Inventory 50,000 Mortgages Payable 428,000 Prepaid Expenses 10,400 Loan Payable 130,000 Building 380,000 Notes Payable 84,300 Goodwill 80,000 Ordinary Shares 170,000…The Modesto Company is facing possible liquidation.Using the following information, prepare a statement offinancial affairs in good form.Here’s the company’s most recent balance sheet: Assets Liabilities and equities Cash $12,000 Accounts payable $170,000Accounts Receivable 60,000 Notes payable 90,000Inventory 120,000 Mortgage payable 80,000Investments 45,000Equipment 105,000 Common stock 75,000Land 82,000 Retained earnings 9,000Total assets $424,000 Total Liab. and Eq’s $424,000 The mortgage payable is fully secured by the land. The land can be soldimmediately for $103,000The equipment partially secures the notes payable. The equipment is not ingood shape and at auction will bring only $30,000The market has declined so the investments have lost 40% of their value.It is estimated that 30% of the accounts receivable will have to be written off.The inventory is outdated and will bring only 50% of its book value atauction.Additional income taxes will be $26,000Administrative expenses for…
- A review of the assets and liabilities of the No Good Company in bankruptcy on June 31, 20x3, discloses the following A mortgage payable of P350,000 is secured by land and buildings at P560,000. Notes payable ofP175,000 are secured by equipment valued at P140,000. Assets other than those referred to have an estimated value of P157,500. Liabilities other than those referred to, total P420,000, which included claims with priority of P52,500. What is estimated deficiency to unsecured creditors?ABC Corporation is a financially distressed corporation with the following financial information on April 15, 2022. Estimated Book Values Realized Values P20,000 75,000 70,000 280,000 Cash P20,000 Accounts receivable.net 100,000 150,000 250,000 520,000 Inventories Plant assets Total assets Accounts payable, unsecured Liabilities with priority claims Notes payable, secured by Accounts Receivable Mortgage payable, secured by all Plant assets Total liabilities 150,000 80,000 100,000 220,000 550,000 What is the estimated recovery percentage?Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash Accounts Receivable Equipment-net Land P250,000 150,000 600,000 1,700,000 P2,700,000 P300,000 355,649 200,000 1,500,000 P2,355,649 TOTAL ASSETS LIABILITIES Settlement Amount Accounts Payable Salaries Payable Notes Payable Loan Payable TOTAL LIABILITIES Carrying Amount P1,000,000 500,000 800,000 800,000 P3,100,000 P1,000,000 500,000 805,234 800,000 P3,105,234 EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional 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 the total…