JARIOL, Angel Clarisse C.

BSA 301

AST SEATWORK 1F

Requirement (a):

Assets pledged to fully secured creditors:

Land 1,300,000
Loan payable (750,000)
Available for unsecured creditors 550,000

Assets pledged to partially secured creditors:

Equipment – net 150,000

Notes payable (500,000)
Available for unsecured creditors -

Free assets:
Excess of land over loan payable 550,000
Cash 200,000
Accounts receivable 450,000
Total free assets 1,200,000
Unsecured liabilities with priority:
Administrative expenses (180,000)
Salaries payable (800,000)
Net free assets 220,000

Unsecured liabilities with priority:

Administrative expenses 180,000
Salaries payable 800,000
980,000

Fully secured creditors:

Loan payable 750,000

Partially secured creditors:

Notes payable 500,000

Unsecured liabilities without priority:

Notes payable – excess 350,000
Accounts payable 700,000
1,050,000
Total realizable value of assets
2,100,000
Less: Unsecured liabilities with priority
Salaries (800,000)
Administrative expenses (180,000)
(980,000)

Less: Fully secured liabilities

Loan payable
(750,000)
Less: Secured portion of partially secured
Liabilities
Notes payable (fair value of equipment)
(150,000)
Excess available to unsecured liabilities without priority (Net freeassets)
200 000

Less: Unsecured liabilities without priority

Notes payable - excess over fair value ofe quipment (500K - 150K)
(350,000)
Accounts payable
(700,000)
Estimated deficiency to unsecured non-priority creditors
(830,00
Requirement (b):

Unsecured liabilities with priority:

Administrative expenses 180,000
Salaries payable 800,000
980,000

Fully secured creditors:

Loan payable 750,000

Partially secured creditors:

Notes payable 500,000

Unsecured liabilities without priority:

Notes payable - excess 350,000
Accounts payable 700,000
1,050,000

Requirement (c):

Total realizable value of assets 2,100,000

Less: Unsecured liabilities with priority

Salaries (800,000)
Administrative expenses (180,000) (980,000)

Less: Fully secured liabilities

Loan payable (750,000)

Less: Secured portion of partially secured Liabilities

Notes payable (fair value of equipment) (150,000)

Excess available to unsecured liabilities

220,000
without priority (Net free assets)

Less: Unsecured liabilities without priority Notes

payable - excess over fair value
of
equipment (500K - 150K) (350,000)
Accounts payable (700,000)
Estimated deficiency to unsecured non-
priority creditors (830,000)

Requirement (d):

Estimated recovery Net free assets

percentage of unsecured = Total unsecured
creditors without priority liabilities without priority

= 220,000 ÷ 1,050,000 (see requirement ‘b’) = 20.95%

Requirement (e):
500,000 x 20.95% = 104,761.90

Requirement (f):

BYE-BYE CORPORATION
STATEMENT OF AFFAIRS
AS OF JANUARY 1, 20X1
Available
for
Book Realizabl unsecured
values ASSETS e values creditors
Assets pledged to fully
secured creditors:
1,000,000 Land 1,300,000
Loan payable (750,000) 550,000

Assets pledged to
partially secured
creditors:
600,000 Equipment - net 150,000
Notes payable (500,000) -

Free assets:
200,000 Cash 200,000
500,000 Accounts receivable 450,000 650,000
Total free assets 1,200,000
Less: Unsecured liabilities
with priority (see below) (980,000)
Net free assets 220,000
Estimated deficiency
(squeeze) 830,000
2,300,000 Totals 1,050,000
 Unsecured
Book Realizabl non-priority
values LIABILITIES e values liabilities
Unsecured liabilities with
priority:
- Administrative expenses 180,000
800,000 Salaries payable 800,000 -

Fully secured creditors:

750,000 Loan payable 750,000 -

Partially secured
creditors:
500,000 Notes payable 500,000
Equipment - net (150,000) 350,000

Unsecured creditors:
700,000 Accounts payable 700,000 700,000

(450,000) Shareholders' equity - -

2,300,000 Totals 1,050,000