Question 1 & 2 Answer: C & B

Asset Pledge to fully secure liability: Total

Equipment 60,000.00
Fully Secured Liability:
Accounts Payable -25,600.00 34,400.00
Free Assets:
Cash 8,000.00
Inventories 20,000.00 28,000.00
Liabilities with Priority:
Liquidation & Administrative expenses 8,000.00
Income tax payable 2,000.00
Salaries Payable 15,000.00 -25,000.00
Net Free Assets 37,400.00

Percentage of Recovery 40.48%

Estimated Deficiency 55,000.00

Question 3 Answer: A
Estimated Payment to Mortgage Payable:
Asset pledge to mortgage payable multiply 100% 115,000.00
Excess multiple rate of recovery 22,264.00
137,264.00

Question 4 Answer: C
Estimated Recovery Percentge to Partially Secured Accounts Payable:
Asset pledge to Accounts Payable multiplied by 100% 45,000.00
Excess multiplied by rate of recovery 1,214.40
Estimated Payment to Accounts Payable 46,214.40
Divided by Accounts Payable 48,000.00
96.28%

Question 5 Answer: C
Asset Pledge to fully secured liabilities:
Land 120,000.00
Fully secured liability:
Mortgage Payable -100,000.00 20,000.00
Free Assets:
Cash 100,000.00
Liabilities with Priority:
Salaries Payable 300,000.00
Income Tax Payable 200,000.00 -500,000.00
-380,000.00

Amount received by holder of note payable:

asset pledge to note payable * 100% 250,000.00

Question 6 Answer: D
Amount received by holder of mortgage payable:
Full secured liability * 100% 100,000.00
Question 7 Answer: B
Amount received by employees as their salaries:
remaining free assets:
Excess of asset pledge 20,000.00
Free Asset (Cash) 100,000.00
120,000.00
Question 8 Answer: C
Asset pledge to fully secured liabiity:
Asset 7,500,000.00
Fully secured liability:
mortgage payable -2,000,000.00 5,500,000.00
Free asset: 5,000,000.00
Liabilities with priority:
Salaries Payable 2,000,000.00
Taxes 1,000,000.00 -3,000,000.00
Net free assets 7,500,000.00

Percentage of Recovery 41.67%

Question 9 Answer: C
Asset pledge to partially secured liabilities * 100% 2,500,000.00
excess x rate of recovery 416,700.00
Amount received by partially secured liabilities 2,916,700.00

Question 10 Answer: C
Asset to be realized:
Total assets 434,500.00
Cash -5,500.00 429,000.00
Increase in asset:
credit sales 10,500.00
interest on notes receivables 1,500.00 12,000.00
Liabilities paid:
notes payable 65,000.00
mortgage payable 175,000.00
interest on notes receivables 5,500.00
interest on mortgage 10,500.00 256,000.00
Liabilities not paid:
Accounts payable 59,500.00
Wages Payable 25,000.00
Tax payable 35,000.00 119,500.00
Supplementary debit:
Cost of sales-Cash 30,000.00
Cost of sales-Credit 30,000.00
Administrative expense 13,800.00
Interest expense 16,000.00 89,800.00
906,300.00
Question 11 Answer: D
July 1, Deficit -45,000.00
Net Loss -77,675.00
July 31, Deficit -122,675.00
July 31, Share capital 120,000.00
July31m SHE Deficit -2,675.00

Question 12 Answer: B
Asset not realized 6,650,000.00
Increase in Asset:
Sales on Account 50,000.00
Liabilities Liquidated 2,450,000.00
Liabilities not liquidated 2,229,500.00
Supplementary debit:
Purchasing on account 105,000.00
expenses of trustee 525,000.00
12,009,500.00
Partially Secured Liability:
Mortgage Payable 170,000.00
Asset Pledge to partialy secured liability:
Notes Reveivable -115,000.00 55,000.00
Partially Secured Liability:
Accounts payable 48,000.00
Asset Pledge to partialy secured liability:
Inventories -45,000.00 3,000.00
Liabilities without Priority:
Accounts payable 6,400.00
Accrued Expense 28,000.00 34,400.00
Total Unsecured Liabilities 92,400.00

Partially Secured Liability:

Note Payable 800,000.00
Asset Pledge to Partially Secured Liability:
Inventory -250,000.00 550,000.00
Liability without Priority:
Accounts Payable 400,000.00
Partially secured liability:
Note payable 3,500,000.00
Asset pledge to partially secured liability:
Asset -2,500,000.00
1,000,000.00
Liabilities without priority (squeeze) 17,000,000.00
Total unsecured Liabilities 18,000,000.00

Asset Realized:
Accounts Receivable 30,625.00
Notes Receivable 68,500.00
Equipment 225,000.00
Inventory 60,000.00 384,125.00
Liabilities to be liquidated:
total asset 434,500.00
total she -75,000.00 359,500.00
Asset not realized:
interest receivable 1,500.00
credit sales 10,500.00 12,000.00
Increase in Liabilities:
Interest payable-NP 5,500.00
Interest payable-MP 10,500.00 16,000.00
Supplementary credit:
Cash sales 45,000.00
Inventory Sales 10,500.00
Interest- Notes Receivable 1,500.00 57,000.00
828,625.00
Net loss -77,675.00
Asset realized 2,100,000.00
Asset to be realized 2,940,000.00
Liabilities to be liquidated 4,574,500.00
Purchases on account 105,000.00
Supplementary credit:
Interest received 10,500.00
Sales on account 50,000.00
Sales for cash 1,750,000.00
11,530,000.00

Net Loss -479,500.00