1. MM Company has had severe financial difficulties and is considering the possibility of liquidation.

At this time, the

company has the following assets (stated at net realizable value) and liabilities.
Assets (pledged against debts of 70,000) 116,000
Assets (pledged against debts of 130,000) 50,000
Other assets 80,000
Liabilities with priority 42,000
Unsecured creditors 200,000
In liquidation, how much would be paid to the partially secured creditors? _______________

2. Because of inability to pay its debts, the MM Manufacturing Company has been forced into bankruptcy as of April 30,
2016.The Statement of Financial Position on that date shows:
Assets Liabilities

Cash 2,700 Accounts Payable 52,500

Accounts Receivable 39,350 Notes Payable-PNB 15,000
Notes Receivable 18,500 Notes Payable-Suppliers 51,250
Inventories 87,850 Accrued Wages 1,850
Prepaid Expenses 950 Accrued Taxes 4,650
Land and Buildings 61,250 Mortgage Bond Payable 90,000
48,800 Common Stock-P100 par 75,000
Equipment
Retained Earnings (30,850)

P259,400 259,400

Additional Information:
a. Accounts receivable of 16,110 and notes receivable of 12,500 are expected to be collectible. The good notes are
pledged to Phil. National Bank.
b. Inventories are expected to bring in 45,100 when sold under bankruptcy conditions.
c. Land and buildings have an appraised value of 95,000.They serve as security on the bonds.
d. The current value of the equipment, net of disposal cost is 9,000.

The estimated loss on asset disposition is ___________________

What is the estimated gain on asset disposition? _________________
The expected recovery percentage rounded is ___________________
What is the estimated payment to creditors? _________________________

3. On Dec. 18, 2025, the statement of affairs of MM Company, which is in bankruptcy liquidation, included the ff.:
Assets pledged to fully secured liabilities 100,000
Assets pledged to 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
Fully secured liabilities __________________ unsecured liabilities w/ priority _________________
Partially secured liabilities _______________ unsecured liabilities w/o priority ________________

4. AA Bank loaned 200,000 to MM Co. and it was secured by inventories with BV and FV of 250,000 and 150,000
respectively. What amount will AA receive if all the unsecured creditors of MM received 25% of their claims? _________