CHAP 5

PROBLEM 1: TRUE OR FALSE PROBLEM 2: MULTIPLE CHOICE-THEORY

1D p.158
2A p.157
3A p.187
4B p.187
5D p.186
PLE CHOICE-THEORY
PROBLEM 3 EXERCISES

ASSETS
CASH
ACCOUNTS RECEIVABLES (440K-24%)
NOTES RECEIVABLES
INTEREST NOTE RECEIVABLE
INVENTORY (840K-20K)
PREPAID ASSETS
LAND AND BUILDING
EQUIPMENT
TOTALS

LIABILITIES
ACCRUED EXPENSES
CURRENT TAX PAYABLE
ACCOUNTS PAYABLE
NOTE PAYABLE
LOAN PAYABLE
INTEREST ON LOAN PAYABLE
ADMINISTRATIVE EXPENSES

ESTIMATED DEFICIENCY

TOTALS

BOOK VALUES

5,000,000.00
 600,000.00
.

80,000.00
440,000.00
200,000.00
-
1,060,000.00
20,000.00

7,400,000.00

BOOK VALUES

-
50,000.00
700,000.00

4,000,000.00
-

600,000.00

392,000.00
2,000,000.00
 (342,000.00)
7,400,000.00

TOTAL FREE ASSETS

TOTAL UNSECURED LIABILITIES WITH PRIORITY
NET FREE ASSETS
DIVIDED BY: TOTAL UNSECURED LIABILITIES WITHOUT PRIORITY
ESTIMATED RECOVERY PERCENTAGE OF UNSECURED CREDITORS WITHOUT PRIORITY

MR. A OUTSTANDING RECEIVABLE

ESTIMATED RECOVERY PERCENTAGE OF UNSECURED CREDITORS WITHOUT PRIORITY
MR. A RECOVERY OF HIS CLAIM
REALIZABLE VALUES
80,000.00
334,400.00
200,000.00
20,000.00
820,000.00
-
5,200,000.00
400,000.00
7,054,400.00

442,000.00
700,000.00
2,000,000.00
600,000.00
4,000,000.00
30,000.00
60,000.00
7,832,000.00

777,600.00

7,054,400.00

BIG CO.
STATEMENT OF AFFFAIRS
ASSETS

ASSETS PLEDGED TO FULLY SECURED CREDITORS

LAND AND BUILDING
LOAN PAYABLE
INTEREST ON LOAN
 ASSETS PLEDGED TO PARTIALLY SECURED CREDITORS
EQUIPMENT, NET

FREE ASSETS
CASH
ACCOUNTS RECEIVABLES
NOTES RECEIVABLES
INTEREST NOTE RECEIVABLE
INVENTORY
PREPAID ASSETS
TOTAL FREE ASSETS
UNSECURED LIABILITIES WITH PRIORITY
NET FREE ASSETS
ESTIMATED DEFICIENCY
TOTAL UNSECURED LIABILITIES WITH PRIORITY

LIABILITIES

UNSECURED LIABILITIES WITH PRIORITY

ADMINISTRATIVE EXPENSES
ACCRUED SALARIES
TAX PAYABLE
TOTAL UNSECURED LIABILITIES WITH PRIORITY

FULLY SECURED CREDITORS

LOAN PAYABLE
INTEREST ON LOAN PAYABLE

PARTIALLY SECURED CREDITORS

NOTE PAYABLE
EQUIPMENT, NET

UNSECURED CREDITORS
ACCRUED EXPENSES NET OF ACCRUED SALARIES (442K-50K)
ACCOUNTS PAYABLE
TOTAL UNSECURED LIABILITIES WITHOUT PRIORITY
SHAREHOLDERS EQUITY

2,624,400.00
(810,000.00)
1,814,400.00
2,592,000.00
70%

500,000.00
70%
350,000.00
RS
REALIZABLE VALUES AVAILABLE FOR UNSECURED SECURITIES

5,200,000.00
(4,000,000.00)
(30,000.00) 1,170,000.00
 400,000.00 -

80,000.00
334,400.00
200,000.00
20,000.00
820,000.00
- 1,454,400.00
2,624,400.00
(810,000.00)
1,814,400.00
777,600.00
2,592,000.00

REALIZABLE VALUES AVAILABLE FOR UNSECURED SECURITIES

60,000.00
50,000.00
700,000.00
810,000.00 -

4,000,000.00
30,000.00 -

600,000.00
(400,000.00) 200,000.00

392,000.00
2,000,000.00 2,392,000.00
2,592,000.00
 -
2,592,000.00
PROBLEM 4: MUTIPLE CHOICE-COMPUTATIONAL

1
2
3
4
5
6

8
9
10
E-COMPUTATIONAL

B
A
C
D

ASSETS
CASH
ACCOUNTS RECEIVABLE (600K*60%)
INVENTORY (1560K/2)
LAND AND BUILDING
EQUIPMENT (400K-70K)
TOTALS

LIABILITIES
ACCOUNTS PAYABLE (1600K-23K-420K)
INCOME TAX PAYABLE
NOTES PAYABLE
LOANS PAYABLE
INTEREST NOTES PAYABLE
INTEREST LOANS PAYABLE
ESTIMATED ADMIN EXPENSES
ACCRUED EXPENSES

ESTIMATED DEFICIENCY (SQUEEZE)

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

ASSETS PLEDGED TO FULLY SECURED CREDITORS

LAND & BUILDING
LOANS PAYABLE
INTEREST LOANS
ASSETS PLEDGED TO PARTIALLY SECURED CREDITORS

EQUIPMENT
NOTES PAYABLE

FREE ASSETS
CASH
ACCOUNTS RECEIVABLES
INVENTORY
TOTAL FREE ASSETS
UNSECURED LIABILITIES WITH PRIORITY
NET FREE ASSETS
ESTIMATED DEFICIENCY
TOTAL UNSECURED LIABILITIES WITHOUT PRIORITY

UNSECURED LIABILITIES WITH PRIORITIES

ADMIN. EXPENSES
INCOME TAX PAYABLE
ACCRUED EXPENSES
TOTAL UNSECURED LIABILITIES WITH PRIORITIES

FULLY SECURED LIABILITIES

LOANS PAYABLE
INTEREST LOANS

PARTIALLY SECURED LIABILITIES

NOTES PAYABLE
INTEREST ON NOTES
EQUIPMENT

UNSECURED LIABILITIES WITHOUT PRIORITIES

CASH DISCOUNT
WAIVED PAYMENT
ACCOUNTS PAYABLE
TOTAL UNSECURED LIABILITIES WITHOUT PRIORITIES
NFA
DIVIDED BY: UNSECURED LIABILITIES WITHOUT PRIORITIES
ESTIMATED PERCENTAGE

PARTIALLY CREDITORS [330K+(750K*63.45%)]

MR. A RECOVERY OF CLAIM (80K*63.45%)

B
D

TOTAL FREE ASSETS

FULLY SECURED CREDITORS
ASSETS PLEDGED TO PARTIALLY SECURED CREDITORS
UNSECURED PRIORITIES WITH LIABILITIES
NFA

NFA
DIVIDED BY: UNSECURED LIABILITIES WITHOUT PRIORITIES
ESTIMATED PERCENTAGE

PARTIALLY SECURED [60K+(40K*60%)]

GENERAL UNSECURED CREDITORS (260K*60%)

ATHENA CO (600K-100K)
RILEY CO
NAIA CO (120K-50K)
TOTALS
MULTIPLY: RATE
NET FREE ASSETS

A
A
B

ASSETS
● ASSETS TO BE REALIZED
ACCOUNTS RECEIVABLE
INVENTORY
EQUIPMENT
CASH
TOTALS

●ASSETS REALIZED
ACCOUNTS RECEIVABLE (600K*90%-108K)
INVENTORY (900K/2*80%)
EQUIPMENT (380K-50K)
TOTALS

LIABILITIES
●LIABILITIES TO BE LIQUIDATED
ACCOUNTS PAYABLE
LOANS PAYABLE
TOTALS

●LIABILITIES LIQUIDATED
PAYMENT OF ACCOUNTS PAYABLE
PAYMENT OF ACCRUED EXPENSES
PAYMENT OF LOANS PAYABLE
TOTALS

●SUPPLEMENTARY EXPENSES
LIQUIDATION COSTS
ASSETS TO BE REALIZED
ASSETS ACQUIRED
LIABILITIES LIQUIDATED
LIABILITIES NOT LIQUIDATED
SUPPLEMENTARY EXPENSES

NET GAIN (LOSS)

BEGINNING BALANCE
ACCOUNTS RECEIVABLE COLLECTED
SALE OF INVENTORY
SALE OF EQUIPMENT
SALE OF SCRAP MATERIALS

CASH ENDING BALANCE

REALIZABLE VALUES
100,000.00
360,000.00
780,000.00
2,300,000.00
330,000.00
3,870,000.00

1,157,000.00
780,000.00
1,000,000.00
1,200,000.00
80,000.00
70,000.00
120,000.00
160,000.00
4,567,000.00

(697,000.00)

3,870,000.00

ASSETS

2,300,000.00
(1,200,000.00)
(70,000.00) 1,030,000.00
 370,000.00
(1,000,000.00) -

100,000.00
360,000.00
780,000.00 1,240,000.00
2,270,000.00
(1,060,000.00)
1,210,000.00
697,000.00
1,907,000.00

LIABILITIES

120,000.00
780,000.00
160,000.00
1,060,000.00 -

1,200,000.00
70,000.00 -

1,000,000.00
80,000.00
(330,000.00) 750,000.00

(23,000.00)
(420,000.00)
1,600,000.00 1,157,000.00
1,907,000.00
 1,210,000.00
1,907,000.00
63.45%

805,875.00

50,760.00

REALIZABLE VALUES
390,000.00
(130,000.00)
(60,000.00)
(20,000.00)
180,000.00

260,000.00
40,000.00
300,000.00

180,000.00
300,000.00
60%

84,000.00

156,000.00

REALIZABLE VALUES
500,000.00
80,000.00
70,000.00
650,000.00
65%
422,500.00
 ASSETS
●ASSETS ACQUIRED
600,000.00 INVENTORY (900/2*60%) 270,000.00
900,000.00
400,000.00
(100,000.00)
1,800,000.00

●ASSETS NOT REALIZED

432,000.00 ACCOUNTS RECEIVABLE (600*10%) 60,000.00
360,000.00 INVENTORY (900K/2) 450,000.00
330,000.00 TOTALS 510,000.00
1,122,000.00

LIABILITIES
●LIABILITIES NOT LIQUIDATED
1,600,000.00 ACCRUED EXPENSES (100K-80K) 20,000.00
1,500,000.00 ACCOUNTS PAYABLE 1,600,000.00
3,100,000.00 TOTALS 1,620,000.00

100,000.00
80,000.00
1,000,000.00
1,180,000.00

●SUPPLEMENTARY INCOME
50,000.00 SRAP MATERIALS 10,000.00
DEBITS CREDITS
1,800,000.00 1,122,000.00 ASSETS REALIZED
270,000.00 510,000.00 ASSETS NOT REALIZED
1,180,000.00 3,100,000.00 LIABILITIES TO BE LIQUIDATED
1,620,000.00 10,000.00 SUPPLEMENTARY INCOME
50,000.00

4,920,000.00 4,742,000.00

178,000.00

DEBITS CREDITS
100,000.00 100,000.00 PAYMENT OF ACCOUNTS PAYABLE
432,000.00 80,000.00 PAYMENT OF SALARIES
360,000.00 1,000,000.00 PAYMENT OF LOAN
330,000.00 50,000.00 LIQUIDATION COSTS
10,000.00

1,232,000.00 1,230,000.00

2,000.00
 BE LIQUIDATED
ARY INCOME

ACCOUNTS PAYABLE