Let’s Analyze

Activity 1.
1. On December 18, 2020, the statement of affairs of Downside Company, which is in bankruptcy
liquidation, included the following:

Assets pledged for fully secured liabilities 110,000

Assets pledged for partially secured liabilities 40,000
Free assets 120,000
Fully secured liabilities 80,000
Partially secured liabilities 50,000
Unsecured liabilities with priority 60,000
Unsecured liabilities without priority 90,000

Compute the estimated amount to be paid to

(1) fully secured liabilities,
(2) unsecured liabilities with priority,
(3) partially secured liabilities, and
(4) unsecured liabilities without priority.

2. The following data were taken from the statement of affairs for Liquo Company:
Assets pledged for fully secured liabilities (FV, P75,000) 90,000
Assets pledged for partially secured liabilities (FV, P52,000) 74,000
Free assets (FV, P40,000) 70,000
Fully secured liabilities 30,000
Partially secured liabilities 60,000
Unsecured liabilities with priority 7,000
Unsecured liabilities without priority 112,000

Compute the
(1) total estimated deficiency to unsecured creditors, and
(2) the expected recovery per peso of unsecured claims.

3. Palubog Co. is insolvent and its statement of affairs shows the following information:
Estimated gains on realization of assets 1,440,000
Estimated losses on realization of assets 2,000,000
Additional assets 1,280,000
Additional liabilities 960,000
Capital stock 2,000,000
Deficit (1,200,000)
The pro-rate payment on the peso to stockholders (estimated amount to be recovered by stockholders)
is:

4. The following data are provided by the Troubled Company:

Assets at book value 150,000
Assets at net realizable value 105,000
Liabilities at book value:
Fully secured mortgage 60,000
Unsecured accounts and notes payable 70,000
Unrecorded liabilities:
Interest on bank notes 500
Estimated cost of administering estate 6,000

a. The court has appointed a trustee to liquidate the company. The journal entry made by the trustee to
record the assets and liabilities should include an estate deficit of:
b. The statement of affairs should include a deficiency to unsecured creditors of:

5. Lugi Corp.has been undergoing liquidation since January 1. As of March 31, its condensed statement
of realization and liquidation is presented below:

Assets:
Assets to be realized 1,375,000
Assets acquired 750,000
Assets realized 1,200,000
Assets not realized 1,375,000

Liabilities:
Liabilities liquidated 1,875,000
Liabilities not liquidated 1,700,000
Liabilities to be liquidated 2,250,000
Liabilities assumed 1,625,000

Revenues and Expenses:

Supplementary charges 3,125,000
Supplementary credits 2,800,000

The net gain (loss) for the three-month period ending March 31 is: