Problem 1

Glenn, Inc. signed a note payable to BPI for 100,000. Accrued interest on the note is 2,500.
The note is secured by equipment with a book value of 115,000. The equipment is sold for 78,000
and unsecured creditors receive 30% of their claims. The bank should receive what amount in
settlement of the note and interest.

Answer:

Equipment at selling price ₱78,000.00 Equipment at selling price

Note Payable ₱102,500.00 Amounts to be recovered
-₱24,500.00
Recovery Percentage 30%
Amounts to be recovered ₱7,350.00
₱78,000.00
₱7,350.00
₱85,350.00
Problem 2

Immanuel Co. filed a voluntary bankcruptcy petition on June 30, 2021, and the statement of affairs reflects the following amou

Estimated
Current
Book Value Value
Assets:
Assets pledged w/ fully secured creditors 300,000 370,000
Assets pledged w/ partially secured creditors 180,000 120,000
Free Assets 420,000 320,000
900,000 810,000
Liabilities:
Liabilities w/ priority 70,000
Fully secured creditors 260,000
Partially secured creditors 200,000
Unsecured creditors 540,000
1,070,000

Assume that the assets are converted to cash at the estimated current values
and the business is liquidated. What amount of cash will be available to pay unsecured non-priority claims?

Answer:

Assets pledged w/ fully secured creditors 370,000

Fully secured creditors 260,000
Surplus 110,000
Other Free Assets 320,000
Total Free Assets 430,000
Liabilities w/ priority 70,000
Net Free Assets 360,000
affairs reflects the following amounts.

priority claims?
Problem 3

Jannine and Jerlyn, Inc. purchased a Cadillac automobile with little cash down and signed a note, secured by the Cadillac,
for 48 easy monthly payments. When the company files for bankcruptcy, the balance due on the Cadillac amount to P6,000,00
The car has a book value of P8,000,000 and net realizable value of P4,000,000. The unsecured creditors of Jannine and Jerlyn,
can expect to receive 50% of their claims. In the liquidation, the bank that holds the note on the Cadillac should receive:

Answer:

Car-cadillac, NRV ₱4,000,000.00 Car-cadillac, NRV

Note Payable ₱6,000,000.00 Amounts to be recovered
-₱2,000,000.00
Recovery Percentage 50%
Amounts to be recovered ₱1,000,000.00
ote, secured by the Cadillac,
the Cadillac amount to P6,000,000.
d creditors of Jannine and Jerlyn, Inc.
he Cadillac should receive:

₱4,000,000.00
₱1,000,000.00
₱5,000,000.00
GABGAB Corp. has filed for voluntary insolvency and is about to liquidate its business. GABGAB Corp.’s statement of financial p

ASSETS
Current assets:
Cash 50,000
Accounts receivable 320,000
Note receivable 200,000
Inventory 730,000
Prepaid assets 10,000
1,310,000

Additional information:
The following information was determined before the commencement of the liquidation process:
a. Only 86% of the accounts receivable is collectible.
b. The note receivable is fully collectible. An accrued interest receivable of P15,000 was not yet recorde
c. The inventory has an estimated net selling price of P420,000.
d. The prepaid assets are nonrefundable.
e. The land and building are expected to be sold at a total amount of P2,800,000.
f. The equipment is expected to be sold at a net selling price of P800,000.

REQUIRED:
How much is the estimated gross gain on asset disposition?

ANSWER:
BALANCE PER SFP REALIZABLE VALUE
CASH 50,000 50,000
A/R 320,000 275200
N/R 200,000 215,000
INVENTORY 730,000 420,000
PREPAID ASSETS 10,000 0
LAND 700,000
2,800,000
BUILDING 4,000,000
EQUIPMENT 500,000 800,000
GOODWILL 10,000 0
 ts business. GABGAB Corp.’s statement of financial position immediately prior to the liquidation process is shown below:

Noncurrent assets:
Land 700,000
Building, net 4,000,000
Equipment, net 500,000
Goodwill 10,000
5,210,000

encement of the liquidation process:

receivable of P15,000 was not yet recorded.

mount of P2,800,000.
of P800,000.

GAIN OR LOSS
0
-44,800
15,000 N/R 15,000
-310,000 EQUIPMENT 300,000
-10,000 GAIN 315,000
-1,900,000

300,000
-10,000
n below:
GABGAB Corp. has filed for voluntary insolvency and is about to liquidate its business. GABGAB Corp.’s statement of financial p

ASSETS
Current assets:
Cash 50,000
Accounts receivable 320,000
Note receivable 200,000
Inventory 730,000
Prepaid assets 10,000
1,310,000

Additional information:
The following information was determined before the commencement of the liquidation process:
a. Only 86% of the accounts receivable is collectible.
b. The note receivable is fully collectible. An accrued interest receivable of P15,000 was not yet recorde
c. The inventory has an estimated net selling price of P420,000.
d. The prepaid assets are nonrefundable.
e. The land and building are expected to be sold at a total amount of P2,800,000.
f. The equipment is expected to be sold at a net selling price of P800,000.

REQUIRED:
How much is the estimated gross LOSS on asset disposition?

ANSWER:
BALANCE PER SFP REALIZABLE VALUE
CASH 50,000 50,000
A/R 320,000 275200
N/R 200,000 215,000
INVENTORY 730,000 420,000
PREPAID ASSETS 10,000 0
LAND 700,000
2,800,000
BUILDING 4,000,000
EQUIPMENT 500,000 800,000
GOODWILL 10,000 0
 ts business. GABGAB Corp.’s statement of financial position immediately prior to the liquidation process is shown below:

Noncurrent assets:
Land 700,000
Building, net 4,000,000
Equipment, net 500,000
Goodwill 10,000
5,210,000

encement of the liquidation process:

receivable of P15,000 was not yet recorded.

mount of P2,800,000.
of P800,000.

GAIN OR LOSS
0 A/R -44,800
-44,800 INVENTORY -310,000
15,000 PREPAID ASSET -10,000
-310,000 LAND AND BUILDING -1,900,000
-10,000 GOODWILL -10,000
LOSS -2,274,800
-1,900,000

300,000
-10,000
is shown below:
Problem 6

ABC Co.’s statement of realization and liquidation shows the following:

ASSETS:
Assets to be realized 2,000,000
Assets acquired 15,000
Assets realized 1,180,000
Assets not realized 220,000
LIABILITIES:
Liabilities liquidated 2,130,000
Liabilities not liquidated 1,190,000
Liabilities to be liquidated 2,870,000
Liabilities assumed 32,000

SUPPLEMENTARY ITEMS:

Supplementary expenses 25,000

Supplementary income 18,000

How much is the net gain (loss) for the period?

Answer:

DEBITS CREDITS

Assets to be realized 2,000,000 1,180,000 Assets realized

Assets not
Assets acquired 15,000 220,000
realized
Liabilities to be
Liabilities liquidated 2,130,000 2,870,000
liquidated
Liabilities
Liabilities not liquidated 1,190,000 32,000
assumed
Supplementary
Supplementary expenses 25,000 18,000
income
Totals 5,360,000 4,320,000 Totals
Net Loss –
1,040,000 excess of Dr.
Over Cr.
Problem 7

ABC Co.’s statement of realization and liquidation shows the following:

ASSETS:
Assets to be realized 2,000,000
Assets acquired 15,000
Assets realized 1,180,000
Assets not realized 220,000
LIABILITIES:
Liabilities liquidated 2,130,000
Liabilities not liquidated 1,190,000
Liabilities to be liquidated 2,870,000
Liabilities assumed 32,000
SUPPLEMENTARY ITEMS:
Supplementary expenses 25,000
Supplementary income 18,000

If the estate deficit at the end of the period is P870,000, how much is the ending balance of cash?

Answer:

ASSETS = LIABILITIES + EQUITY

Liabilities not
Cash 100,000 (squeeze) 1,190,000
liquidated
Assets not realized 220,000 Estate deficit -870,000
Total 320,000 (extend) Total 320,000
ABILITIES + EQUITY

(start)
Problem 8

Assets to be realized P103,125

Assets acquired 112,500
Assets realized 131,250
Assets not realized 46,875
Liabilities to be liquidated 168,750
Liabilities assumed 56,250
Liabilities liquidated 112,500
Liabilities not liquidated 140,625
Supplementary charges 146,250
Supplementary credits 159,375

How much is the gain (loss) on realization and liquidation for the period?

Answer:

DEBITS CREDITS
P103,12 Assets
Assets to be realized 131,250
5 realized
Assets not
Assets acquired 112,500 46,875
realized

Liabilities to
Liabilities liquidated 112,500 168,750
be liquidated

Liabilities
Liabilities not liquidated 140,625 56,250
assumed
Supplement
Supplementary expenses 146,250 159,375
ary income
Totals 615,000 562,500 Totals
Net Loss –
excess of
Net loss: 52,500 Dr. Over
Cr.
Problem 8

Assets to be realized P103,125

Assets acquired 112,500
Assets realized 131,250
Assets not realized 46,875
Liabilities to be liquidated 168,750
Liabilities assumed 56,250
Liabilities liquidated 112,500
Liabilities not liquidated 140,625
Supplementary charges 146,250
Supplementary credits 159,375

If the ending balances of capital stock and retained earnings are P93,750 and P37,500, respectively, how much is the

Answer:

LIABILIT EQUIT
ASSETS = +
IES Y
131,250
271,875 140,625 (93,750
+
37,500)
Non-cash -46,875
CASH 225,000
ively, how much is the ending balance of cash?
Problem 8

Assets to be realized P103,125

Assets acquired 112,500
Assets realized 131,250
Assets not realized 46,875
Liabilities to be liquidated 168,750
Liabilities assumed 56,250
Liabilities liquidated 112,500
Liabilities not liquidated 140,625
Supplementary charges 146,250
Supplementary credits 159,375

If the beginning balances of capital stock and retained earnings are P93,750 and P37,500, respectively, How much is

Answer:

LIABILIT EQUIT
ASSETS = +
IES Y
78,750
219,375 140,625 (131,250
-52,500)
Non-Cash -46,875
CASH 172,500
pectively, How much is the ending balance of cash?