PROBLEM 1: Requirement 1

Miner Company
Statement of affairs
As of May 31, 20x4
ASSETS Available for unsecured
Book Value Realizable Value creditors
Assets pledged to fully secured creditors
50,000 Notes Receivable 39,800
1,200 Accrued Interest on N/R 1,000 40,800
Notes Payable (40,000)
Accrued Interest on N/P (800) (40,800) 0

119,000 Building 75,000

Notes Payable (20,000)
Accrued Interest on N/P (800) (20,800) 54,200

Assets pledged to partially secured creditors

13,200 Equipment 4,200
Note Payable (10,000) 0

Free Assets
6,000 Cash 6,000
61,000 Accounts Receivable 50,000
60,000 Inventory 30,000
1,100 Prepaid Insurance 400
8,500 Goodwill 0 86,400
Total Free Assets 140,600
Less: Unsecured Liability with priority (8,400)
Net Free Assets 132,200
Estimated Deficiency 53,600
320,000 185,800

LIABILITIES AND EQUITY Unsecured liab

Unsecured Liabilities with priority: Realizable Values w/out priority
6,000 Accrued Wages 6,000
2,400 Taxes Payable 2,400
Total 8,400 0

Fully Secured Creditors:

60,000 Notes Payable 60,000
1,600 Interest Payable 1,600
Total 61,600 0

Partially Secured Creditors:

10,000 Note Payable 10,000
Equipment (4,200) 5,800

Unsecured Creditors
170,000 Accounts Payable 170,000
10,000 Notes Payable 10,000 180,000

Stockholder's Equity 0
110,000 Common Stock
(50,000) Retained Earnings (deficit)
320,000 185,800
 Miner Company
Deficiency Statement
May 31, 20x4
Estimated losses on realization of assets:
Accounts Receivable 11,000
Notes Receivable 10,400
Inventory 30,000
Building 44,000
Equipment 9,000
Prepaid Insurance 700
Goodwill 8,500
Less: Loss to be absorbed by stockholders
Common stock 110,000
Deficit (50,000) 60,000
Estimated Deficiency to unsecured creditors 53,600

Requirement 2:
Net free assets
Estimated dividend rate to general unsecured creditors = Total Unsecured liabilities without priority
132,200
= 185,800
= 0.7115 or 71.15%
PROBLEM 2: Requirement 1

Wilbur Corporation
Statement of affairs
As of December 31, 20x4
ASSETS
Book Value Realizable Value Available for unsecured
creditors
Assets pledged to fully secured creditors
40,000 Accounts Receivable 40,000
Note Payable (35,000)
Accrued Interest on N/P (3,500) 1,500

50,000 Land 65,000

110,000 Plant and Equipment 100,000 165,000
Mortgage Payable (150,000)
Accrued Interest on M/P (7,500) (157,500) 7,500

Assets pledged to partially secured creditors

20,000 Marketable Securities 16,000
Note Payable (20,000)
Accrued Interest on N/P (800) (20,800) 0

35,000 Inventory 32,000

Accounts Payable (60,000) 0

Free Assets
4,000 Cash 4,000
35,000 Accounts Receivable 35,000
55,000 Inventory 50,000
6,000 Prepaid Insurance 1,000
140,000 Plant and Equipment 60,000
48,000 Franchises 15,000 165,000
Total Free Assets 174,000
Less: Unsecured Liability with priority (43,000)
Net Free Assets 131,000
Estimated Deficiency 45,000
543,000 176,000

LIABILITIES AND EQUITY Unsecured liab

Unsecured Liabilities with priority: Realizable Values w/out priority
13,000 Wages Payable 13,000
20,000 Taxes Payable 20,000
Legal and Accounting fees 10,000
Total 43,000 0

Fully Secured Creditors:

35,000 Notes Payable 35,000
3,500 Accrued Interest on N/P 3,500
Total 38,500 0

150,000 Mortgage Payable 150,000

7,500 Accrued Interest on M/P 7,500 0
Total 157,500
 Partially Secured Creditors:
20,000 Note Payable 20,000
800 Accrued Interest on N/P 800 20,800
Marketable Securities (16,000) 4,800

60,000 Accounts Payable 60,000

Inventory (32,000) 28,000

Unsecured Creditors
60,000 Accounts Payable 60,000
13,200 Accrued Interest Expense/Interest Payable 13,200
70,000 Note Payable 70,000 143,200
Stockholder's Equity 0
180,000 Common Stock
(90,000) Retained Earnings (deficit)
543,000 176,000

Requirement 2:
Net free assets
Estimated dividend rate to general unsecured creditors = Total Unsecured liabilities without priority
131,000
= 176,000
= 0.7443 or 74.43%