For Items 1-3

The following information was gathered from books of HYPER CORPORATION which is currently undergoing
bankruptcy proceedings:
 Note payable of 97, 500 is secured by Accounts receivable of 120, 000 that is estimated to be realizable at
75%.
 A mortgage payable of 192,500 is secured by building valued at 35,000 less than its carrying amount of 230,
000.
 Assets not mentioned above have estimated value of 62, 500 an amount that is 15,000 above carrying
amount.
 Total liabilities not mentioned above total 96,000 including claims with priority of 18,500

1. How much is the estimated loss on assets realization?

a. 65,000 c. 45,000
b. 50,000 d. 60,000

2. How much is the estimated recovery percentage?

a. 80.65% c. 54.71%
b. 67.77% d. 51.67%

3. How much is the estimated recovery percentage for partially secured creditors?
a. 96.76%
b. 96.52%
c. 98.51%
d. 96.29%

4. The following are the data for Viagra Company before liquidation:
Stockholders' equity, per books
Capital stock P350,000
Retained earnings (deficit) (54,250)
Estimated gain on realization of assets:
Land and buildings 78,750
Estimated loss on realization of assets:
Accounts receivable 23,100
Inventories 84,000
Prepaid expenses 2,100
Machinery and equipment 70,000
Goodwill 157,500
Estimated claims requiring settlement - unrecorded:
Liquidation expenses 17,500
Contingent liabilities 26,250
How much is the estimated deficiency to unsecured creditors?

a. P75,000
b. P 5,950
c. P81,55
d. P 7,350
5. Katherine, a CPA, has prepared a statement of affairs. Assets which there are no claims or liens are
expected to produce P70,000, which must be allocated to unsecured claims of all classes totaling
P105,000. The following are some of the claims outstanding:
1. Accounting fees for Katherine, P1,500.
2. An unrecorded note for P1,000, on which P60 of interest has accrued, held by Angie.
3. A note for P3,000 secured by P4,000 receivables, estimated to be 60% collectible held
by Joy.
4. API ,500 note, on which P30 of interest has accrued, held by Joyots. Property with a
book value of P1,000 and a market value of P1,800 is pledged to guarantee payment of principal
and interest.
5. Unpaid income taxes of P3,500.
Compute the estimated payment to partially secured creditors:
a. P1,060 c. P2,490
b. P1,950 d. P2,790

6. The trust for Ardolio, Inc. prepares a statement of affairs which shows that unsecured creditors
whose claims total P60,000 may expect to receive approximately P36,000 if assets are sold for the
benefit of creditors.
• Michael is an employee who is owed P750.
• Meldcan holds a note for P1,000 on which interest of P50 is accrued; nothing has been
pledged on the note.
• Compboy holds a note of P6,000 on which interest of P300 is accrued: securities with
a book value of P6,500 and a present market value of P5,000 are pledged on the note.
• Serpor holds a note for P2.500 on which interest of P150 is accrued property with a
book value of P2.000 and a present market value of P3.000 is pledged on the note.

How much may each of the following creditors hope to receive?

Michael Meldcan Compboy Serpor
a. P -0- P -0- P -0- P -0-
b. 90 -0- 6,300 2,390
c. 350 1,050 5,780 -0-
d. 750 630 5,780 2,650

For Items 7-10

On January 1, 2015, Mars, Len and Brie formed MLB Partnership with original contribution of
₱4,000,000, ₱1,000,000 and ₱5,000,000, respectively. The article of co-partnership provides that profit or
loss shall be distributed under the following terms:
 Mars, Len, and Brie shall be entitled to monthly salary of ₱10,000, ₱20,000, and ₱30,000,
respectively.
 10% interest on the original capital contribution.
 As managing partner, Len shall receive bonus equal to 10% of net income after salaries and
interest but before bonus.
 The remainder shall be distributed on the basis of original capital contribution ratio.

During 2015, the partners regularly withdraw ¼ of their monthly salary. The December 31, 2015
Statement of Financial Position of MLB Partnership shows that the capital balance of Mars is ₱5,310,800.

On January 1, 2016, Brie decided to retire from the partnership and it was agreed that Brie shall
receive ₱6,000,000. The retiring agreement provides that any bonus shall be distributed on the basis of
original capital contribution ratio.
 After the retirement of Brie, the remaining partners decided to fully amend their profit or loss sharing
agreement under the following terms:
 Mars and Len shall be entitled to quarterly salary of ₱40,000 and ₱30,000, respectively.
 20% interest on the beginning of the year capital balance.
 The remainder shall be distributed in the ratio of 1:4 for Mars and Len, respectively.

During 2016, the partnership reported net loss of ₱1,000,000. On January 1, 2017, the partners
decided to liquidate the partnership with the outstanding liabilities to third person amounting to
₱3,000,000 and the cash balance reported at ₱1,000,000. During the liquidation process, ₱200,000 were
paid for liquidation expenses. Len receives ₱300,000 at the end of liquidation process. The partners agree
to use the ratio 1:4 for Mars and Len, respectively, for purposes of liquidation.

7. What is the net income of the partnership for the year ended December 31, 2015?
a. ₱3,772,000
b. ₱1,720,000
c. ₱2,872,000
d. ₱4,000,000

8. What is the capital balance of Len after the retirement of Brie on January 1, 2016?
a. ₱1,872,400
b. ₱1,932,400
c. ₱1,890,400
d. ₱1,854,400

9. What is the amount received by Mars at the end of liquidation process?

a. ₱6,676,240
b. ₱6,780,400
c. ₱6,320,320
d. ₱6,210,200

10. What is the net proceeds from the sale of non-cash assets at the process of liquidation?
a. ₱6,676,240
b. ₱6,780,400
c. ₱6,320,320
d. ₱6,210,200