QUESTIONS 1 TO 10 ARE BASED FROM THE FOLLOWING DATA:

Alanah P. Rah Corporation is about to liquidate. Below is the corporation's

financial position prior to the liquidation process.

ASSETS LIABILITIES AND EQUITY

CASH 35,000.00 ACCRUED EXPENSES 150,000.00
ACCOUNTS RECEIVABLE 180,000.00 LOAN FROM OFFICER 100,000.00
NOTES RECEIVABLE 200,000.00 ACCOUNTS PAYABLE 500,000.00
INVENTORY 200,000.00 LOAN PAYABLE 2,000,000.00
LAND 1,000,000.00 NOTES PAYABLE 500,000.00
BUILDING 800,000.00 SHARE CAPITAL 500,000.00
EQUIPMENT, NET 500,000.00 RETAINED EARNINGS (DEFICIT) - 835,000.00
TOTAL ASSETS 2,915,000.00 2,915,000.00

Only 75% of the Accounts Receivable is collectible while 80% of the Notes Receivable is expected
to be collected. The Loan Payable is secured by the Land and Building which is expected to sell
at a package price of Php2,200,000.00. The Notes Payable is secured by the Equipment with
estimated net selling price of Php350,000.00. Of the Accounts Payable, Php100,000.00 is secured
by half of the inventory with liquidation value of Php75,000.00. The balance of the inventory has
an estimated selling price of Php80,000.00. The accrued expenses include accrued salaries of
Php40,000.00

1. Assuming an Administrative Expenses have been incurred, which of the remaining unsecured
creditors has the next highest order of priority?

a. Accrued Expenses c.Loan from Officer

b. Accrued Salaries d. Accounts payable

2. Of the assets pledged to fully secured creditors, how much will be allocated to unsecured creditors?
a. 200,000.00 c. 610,000.00
b. 2,000,000.00 d. 0.00

3. Of the partially secured liabilities, how much is the unsecured amount?

a. 200,000.00 c. 175,000.00
b. 425,000.00 d. 150,000.00

4. How much is the unsecured liabilities without priority?

a. 200,000.00 c. 410,000.00
b. 610,000.00 d. 425,000.00

5. How much is the estimated deficiency to unsecured creditors without priority?

a. 415,000.00 c. 175,000.00
b. 570,000.00 d. 215,000.00

6. What is the estimated recovery percentage of unsecured liabilities without priority?

a. 80% c. 78%
b. 70% d. 73%
7. Assuming an Administrative Expenses amounting to Php30,000.00 have been incurred, how much is the unsecured liabilities with priori
a. 30,000.00 c. 40,000.00
b. 130,000.00 d. 70,000.00

8. Estimated amount of assets to be paid to fully secured creditors:

a. 0.00 c. 600,000.00
b.500,00.00 d. 2,000,000.00

9. Estimated amount of assets to be paid to partially secured creditors:

a. 425,000.00 c. 1,800,000.00
b. 552,750.00 d. 1,946,000.00

10. Estimated amount of assets to be paid to unsecured creditors withouth priority:

a. 445,300.00 c. 610,000.00
b. 573,050.00 d. 785,000.00

11. Which of the following is not a correct classification of assets in the statement of affairs?
a. Assets pledged to fully secured creditors c. Current Assets
b. Free Assets d. A and B only

12. In the statement of Affairs, assets are measured at:

a. Net Realizable Value c. Book Value
b. Lower of Cost or NRV d.Estimated Selling Price

13. It is the initial report prepared at the start of the liquidation process:
a. Statement of Realization and Liquidation c. Statement of Financial Position
b. Statement of Affairs d. A and B only

14. The estimated deficiency to unsecured creditors without priority is computed as:
a. net free assets less total unsecured liabilities without c. free assets less unsecured liabilities with priority
b. net free assets divided by total unsecured liabilities wd. None of the above

15. Below can be classified as Unsecured Liabilities with Priority except:

a. Administrative Expenses c. Taxes
b. Unpaid Employee Salaries d. Accrued Expenses
 BV NRV
CASH 35,000.00 35,000.00
ACCOUNTS RECEIVABLE 180,000.00 135,000.00
NOTES RECEIVABLE 200,000.00 160,000.00
INVENTORY 200,000.00 155,000.00
LAND AND BUILDING 1,800,000.00 2,200,000.00
EQUIPMENT, NET 500,000.00 350,000.00
TOTAL ASSETS 2,915,000.00 3,035,000.00

ACCRUED EXPENSES 150,000.00 150,000.00

LOAN FROM OFFICER 100,000.00 100,000.00
ACCOUNTS PAYABLE 500,000.00 500,000.00
LOAN PAYABLE 2,000,000.00 2,000,000.00
NOTES PAYABLE 500,000.00 500,000.00
ESTATE DEFICIT - 335,000.00 - 215,000.00
2,915,000.00 3,035,000.00
ecured liabilities with priority?
ASSETS PLEDGED TO FULLY SECURED CREDITOR FREE ASSET
LAND AND BUILDING 2,200,000.00
LOAN PAYABLE - 2,000,000.00 200,000.00

ASSETS PLEDGED TO PARTIALLY SECURED CREDITOR

EQUIPMENT 350,000.00
INVENTORY 75,000.00

FREE ASSETS
CASH 35,000.00
ACCOUNTS RECEIVABLE 135,000.00
NOTES RECEIVABLE 160,000.00
INVENTORY 80,000.00 410,000.00
610,000.00

3,035,000.00

FULLY SECURED LIABILITIES

LOAN PAYABLE 2,000,000.00

PARTIALLY SECURED LIBILITIES

ACCOUNTS PAYABLE 100,000.00
LESS:INVENTORY - 75,000.00 25,000.00

NOTES PAYABLE 500,000.00

EQUIPMENT - 350,000.00 150,000.00 127,750.00
552,750.00

UNSECURED WITH PRIORITY

ACCRUED SALARIES 40,000.00

UNSECURED WITHOUT PRIORITY

ACCRUED EXPENSES 110,000.00
LOAN FROM OFFICER 100,000.00
ACCOUNTS PAYABLE 400,000.00 610,000.00
785,000.00

3,250,000.00

free assets net of unsecured with priority 570,000.00

- 215,000.00

0.73
Question #1
Accrued Salaries - this will fall under the category Unsecured Liability with priority

Question #2
ASSETS PLEDGED TO FULLY SECURED CREDITOR
LAND AND BUILDING 2,200,000.00
LOAN PAYABLE - 2,000,000.00
Portion to be allocated to Unsecured Creditors 200,000.00

Question #3
PARTIALLY SECURED LIBILITIES
ACCOUNTS PAYABLE 100,000.00
LESS:INVENTORY - 75,000.00
Unsecured Accounts Payable 25,000.00

NOTES PAYABLE 500,000.00

EQUIPMENT - 350,000.00
Unsecured Notes Payable 150,000.00

Total Unsecured Portion of Partially Secured Liability 175,000.00

Question #4
UNSECURED WITHOUT PRIORITY
ACCRUED EXPENSES 110,000.00
LOAN FROM OFFICER 100,000.00
ACCOUNTS PAYABLE 400,000.00
Total 610,000.00

Question #5
ASSETS PLEDGED TO FULLY SECURED CREDITOR
LAND AND BUILDING 2,200,000.00
LOAN PAYABLE - 2,000,000.00
TO BE ALLOCATED TO UNSECURED CREDITORS 200,000.00
TOTAL FREE ASSETS 410,000.00
TOTAL ASSETS TO BE ALLOCATED TO UNSECURED CREDITORS 610,000.00
LESS: UNSECURED LIABILITIES WITH PRIORITY 40,000.00
TO BE ALLOCATED TO UNSECURED CREDITORS W/O PRIORITY 570,000.00

PARTIALLY SECURED LIBILITIES

ACCOUNTS PAYABLE 100,000.00
LESS:INVENTORY - 75,000.00
NOTES PAYABLE 500,000.00
EQUIPMENT - 350,000.00
PARTIALLY SECURED LIBILITIES - UNSECURED PORTION 175,000.00
UNSECURED WITHOUT PRIORITY 610,000.00
TOTAL UNSECURED LIABILITIES W/O PRIORITY 785,000.00

TOTAL DEFICIENCY - 215,000.00

Question #6
TO BE ALLOCATED TO UNSECURED CREDITORS W/O PRIORITY 570,000.00
TOTAL UNSECURED LIABILITIES W/O PRIORITY 785,000.00
ESTIMATED RECOVERY PERCENTAGE 73%

Question #7
ACCRUED SALARIES 40,000.00
ADMINISTRATIVE EXPENSE 30,000.00
TOTAL UNSECURED LIABILITIES WITH PRIORITY 70,000.00

Question #8
The whole amount of the loan payable amounting to Php2,000,000.00
will be paid since the value of the asset being pledged to this is higher.

Question #9
PARTIALLY SECURED LIBILITIES
ACCOUNTS PAYABLE 100,000.00
LESS:INVENTORY - 75,000.00
NOTES PAYABLE 500,000.00
EQUIPMENT - 350,000.00
PARTIALLY SECURED LIBILITIES - UNSECURED PORTION 175,000.00
ESTIMATED RECOVERY PERCENTAGE 73%
FREE ASSETS ALLOCATED TO UNSECURED LIABILITIES 127,750.00
VALUE OF INVENTORY (PLEDGED TO ACCOUNTS PAYABLE) 75,000.00
VALUE OF EQUIPMENT (PLEDGED TO NOTES PAYABLE) 350,000.00
PAYMENT TO UNSECURED CREDITORS W/O PRIORITY 552,750.00

Question #10
TOTAL ASSETS TO BE ALLOCATED TO UNSECURED CREDITORS 610,000.00
ESTIMATED RECOVERY PERCENTAGE 73%
ASSETS TO BE PAID TO UNSECURED CREDITORS 445,300.00

Question #11
CURRENT ASSET - CLASSIFICATION OF ASSET IN STATEMENT OF FINANCIAL POSITION

Question #12
In the Statement of Affairs, Assets are measured at Net Realizable Value

Question #13
Statement of Affairs is the initial report during the start of the liquidation process

Question #14
Estimated deficiency equals to net free assets less total unsecured liabilities
without priority
Question #15
Unsecured Liabilities with Priority include taxes due or payables to the governement,
Administrative Expenses such as Trustee's Fee, or unpaid employee salaries
QUESTIONS 16 TO 29 ARE BASED FROM THE FOLLOWING DATA:
Alanah P. Rah Corporation is about to liquidate. A trustee will administer the liquidation. Below
is the corporation's financial position prior to the liquidation process.

ASSETS LIABILITIES AND EQUITY

CASH 35,000.00 ACCRUED EXPENSES 150,000.00
ACCOUNTS RECEIVABLE 180,000.00 LOAN FROM OFFICER 100,000.00
NOTES RECEIVABLE 200,000.00 ACCOUNTS PAYABLE 500,000.00
INVENTORY 200,000.00 LOAN PAYABLE 2,000,000.00
LAND 1,000,000.00 NOTES PAYABLE 500,000.00
BUILDING 800,000.00 SHARE CAPITAL 500,000.00
EQUIPMENT, NET 500,000.00 RETAINED EARNINGS (DEFICIT) - 835,000.00
TOTAL ASSETS 2,915,000.00 2,915,000.00

Below transactions occurred during the liquidation process:

Only 75% of the Accounts Receivable have been collected, the balance was written off.
Only 80% of the Notes Receivable have been collected, the balance was written off.
Half of the inventory was sold for Php110,000.00 with actual cost to sell of Php2,000.00.
The land and building was sold at a package price of Php2,200,000.00.
The equipment was sold for Php350,000.00.
The accrued expenses include accrued salaries of Php40,000.00 which was already paid.
The Loan Payable have been paid in full while Notes Payable was settled for 450,000.00,
the balance was cancelled by the creditor.
Administrative expenses of Php30,000.00 are expected to be incurred during the whole liquidation
process but only Php20,000.00have been paid to this date.

16. How much is the total assets to be recorded in the books of the receiver to record the transfer
of custody over the assets and liabilities of Alanah P. Rah Corporation?
a. 2,915,000.00 c. 2,880,000.00
b. 3,088,000.00 d. 3,053,000.00

17. How much is the total liabilities to be recorded in the books of the receiver to record the transfer
of custody over the assets and liabilities of Alanah P. Rah Corporation?
a. 3,250,000.00 c. 3,280,000.00
b. 3,200,000.00 d. 3,270,000.00

18. How much is the Estate Deficit to be recorded in the books of the receiver to record the transfer
of custody over the assets and liabilities of Alanah P. Rah Corporation?
a. (835,000.00) c. (112,000.00)
b. (335,000.00) d. (132,000.00)

19. How much is the total Assets to be Realized?

a. 2,915,000.00 c. 2,880,000.00
b. 3,088,000.00 d. 3,053,000.00

20. How much is the total Assets Realized?

a. 2,880,000.00 c. 2,988,000.00
b. 2,780,000.00 d. 2,953,000.00
21. How much is the total Assets Not Realized?
a. 135,000.00 c. 100,000.00
b. 133,000.00 d. 98,000.00

22. How much is the Liabilities to be liquidated?

a. 3,250,000.00 c. 3,280,000.00
b. 3,200,000.00 d. 3,270,000.00

23. How much is the Liabilities liquidated?

a. 2,490,000.00 c. 2,520,000.00
b. 2,540,000.00 d. 2,510,000.00

24. How much is the Liabilities not liquidated?

a. 710,000.00 c. 740,000.00
b. 760,000.00 d. 730,000.00

25. How much is the ending Cash Balance?

a. 468,000.00 c. 428,000.00
b. 478,000.00 d 418,000.00

26. How much is the ending Estate Deficit/Equity?

a. (112,000.00) c. (132,000.00)
b. (335,000.00) d. (142,000.00)

27. How much is the Supplementary Expenses?

a. 20,000.00 c. 60,000.00
b. 30,000.00 d. 70,000.00

28. How much is the Supplementary Income?

a. 123,000.00 c. 103,000.00
b. 93,000.00 d. 0.00

29. How much is net gain/loss during the liquidation process?

a. 203,000.00 c. 183,000.00
b. 103,000.00 d. 83,000.00

30. In the statement of Realization and Liquidation, assets to be realized are measured at:
a. Net Realizable Value c. Book Value
b. Lower of Cost or NRV d.Estimated Selling Price
 BV NRV
CASH 35,000.00 35,000.00
ACCOUNTS RECEIVABLE 180,000.00 135,000.00 135,000.00 -
NOTES RECEIVABLE 200,000.00 160,000.00 160,000.00 -
INVENTORY 200,000.00 208,000.00 108,000.00 100,000.00
LAND AND BUILDING 1,800,000.00 2,200,000.00 2,200,000.00 -
EQUIPMENT, NET 500,000.00 350,000.00 350,000.00 -
TOTAL ASSETS 2,915,000.00 3,088,000.00 2,953,000.00 100,000.00 578,000.00
2,880,000.00 3,053,000.00 2,988,000.00

ACCRUED EXPENSES 150,000.00 150,000.00 40,000.00 110,000.00

LOAN FROM OFFICER 100,000.00 100,000.00 - 100,000.00
ACCOUNTS PAYABLE 500,000.00 500,000.00 - 500,000.00 710,000.00
LOAN PAYABLE 2,000,000.00 2,000,000.00 2,000,000.00 -
NOTES PAYABLE 500,000.00 450,000.00 450,000.00 -
ESTATE DEFICIT - 335,000.00 - 112,000.00 - 132,000.00
2,915,000.00 3,088,000.00 2,490,000.00 710,000.00 578,000.00
3,250,000.00 3,200,000.00 2,510,000.00 760,000.00
50,000.00
740,000.00

3,250,000.00 3,200,000.00
3,280,000.00
 -
- 45,000.00 2,880,000.00 2,953,000.00
- 40,000.00 - 100,000.00
8,000.00 2,490,000.00 3,250,000.00
400,000.00 710,000.00 -
- 150,000.00 20,000.00 -
6,100,000.00 6,303,000.00
478,000.00 203,000.00
468,000.00
428,000.00 80,000.00
-
-
-
-
- 50,000.00

123,000.00
- 20,000.00
Question #16
Ledger Account BV
CASH 35,000.00
ACCOUNTS RECEIVABLE 180,000.00
NOTES RECEIVABLE 200,000.00
INVENTORY 200,000.00
LAND AND BUILDING 1,800,000.00
EQUIPMENT, NET 500,000.00
TOTAL ASSETS TRANSFERRED TO THE RECEIVER 2,915,000.00

Question #17
Ledger Account BV
ACCRUED EXPENSES 150,000.00
LOAN FROM OFFICER 100,000.00
ACCOUNTS PAYABLE 500,000.00
LOAN PAYABLE 2,000,000.00
NOTES PAYABLE 500,000.00
TOTAL LIABILITIES TRANSFERRED TO THE RECEIVER 3,250,000.00

Question #18
Ledger Account BV
ESTATE DEFICIT - 335,000.00
TOTAL DEFICIT TRANSFERRED TO THE RECEIVER - 335,000.00

Question #19
Ledger Account BV
ACCOUNTS RECEIVABLE 180,000.00
NOTES RECEIVABLE 200,000.00
INVENTORY 200,000.00
LAND AND BUILDING 1,800,000.00
EQUIPMENT, NET 500,000.00
TOTAL ASSETS TO BE REALIZED 2,880,000.00

Question #20
ACCOUNTS RECEIVABLE 135,000.00
NOTES RECEIVABLE 160,000.00
INVENTORY 108,000.00
LAND AND BUILDING 2,200,000.00
EQUIPMENT, NET 350,000.00
TOTAL ASSETS REALIZED 2,953,000.00

Question #21
PARTICULARS BV
HALF OF THE INVENTORY 100,000.00
TOTAL ASSETS NOT REALIZED 100,000.00
Question #22
Ledger Account BV
ACCRUED EXPENSES 150,000.00
LOAN FROM OFFICER 100,000.00
ACCOUNTS PAYABLE 500,000.00
LOAN PAYABLE 2,000,000.00
NOTES PAYABLE 500,000.00
LIABILITIES TO BE LIQUIDATED 3,250,000.00

Question #23
Ledger Account NET SETTLEMENT
ACCRUED EXPENSES 40,000.00
LOAN PAYABLE 2,000,000.00
NOTES PAYABLE 450,000.00
LIABILITIES LIQUIDATED 2,490,000.00

Question #24
Ledger Account BV
ACCRUED EXPENSES 110,000.00
LOAN FROM OFFICER 100,000.00
ACCOUNTS PAYABLE 500,000.00
LIABILITIES NOT LIQUIDATED 710,000.00

Question #25
PARTICULARS AMOUNT
CASH, BEG BAL 35,000.00
ASSETS REALIZED 2,953,000.00
LIABILITIES LIQUIDATED - 2,490,000.00
ADMINISTRATIVE EXPENSES, PAID - 20,000.00
CASH, ENDING BALANCE 478,000.00

Question #26
PARTICULARS AMOUNT
ESTATE DEFICIT, BEG BAL. - 335,000.00
ASSET (NRV HIGHER THAN BV) 173,000.00
LIABILITY (NET SETTLEMENT LOWER THAN BV) 50,000.00
PAYMENT OF ADMINISTRATIVE EXPENSE - 20,000.00
ESTATE DEFICIT, ENDING BALANCE - 132,000.00

Question #27
SUPPLEMENTARY EXPENSES PERTAINS TO EXPENSES INCURRED DURING
LIQUIDATION SUCH AS PAYMENT FOR ADMINISTRATIVE EXPENSES
AMOUNTING TO PHP20,000.00

Question #28
SUPPLEMENTARY EXPENSES PERTAINS TO INCOME REALIZED DURING
LIQUIDATION WHICH IN THIS CASE IS ZERO (0.00)

Question #29
PARTICULARS AMOUNT
ASSET (NRV HIGHER THAN BV) 173,000.00
LIABILITY (NET SETTLEMENT LOWER THAN BV) 50,000.00
PAYMENT OF ADMINISTRATIVE EXPENSE - 20,000.00
GAIN/(LOSS) DURING THE LIQUIDATION PROCESS 203,000.00

OR

ASSETS TO BE REALIZED 2,880,000.00

ASSETS NOT REALIZED - 100,000.00
ASSETS REALIZED - 2,953,000.00
LIABILITIES LIQUIDATED 2,490,000.00
LIABILITIES NOT LIQUIDATED 710,000.00
LIABILITIES TO BE LIQUIDATED - 3,250,000.00
SUPPLMENTARY EXPENSES 20,000.00
GAIN DURING THE LIQUIDATION PROCESS - 203,000.00

Question #30
ASSETS TO BE REALIZED ARE MEASURED AT BOOK VALUE