NAME ___________________________________, CPA SCORE

1st Comprehensive Quiz Corporate Liquidation

141-B

PROVIDE YOUR SOLUTIONS AT THE ANSWER SHEET GIVEN

PROBLEM 1 The statement of realization and liquidation was prepared for Hopeless Corporation for the three-month period ended December 31,
2023. The totals are as follow;

Assets to be realized P60,000

Assets acquired 80,000
Assets realized 70,000
Assets not realized 25,000
Liabilities liquidated 60,000
Liabilities assumed 30,000
Liabilities to be liquidated 90,000
Liabilities not liquidated 75,000
Supplementary charges 78,000
Supplementary credits 85,000

1. Compute the total amount of net income (loss) for the period _____________

PROBLEM 2 Worthy Corporation is being liquidated. All assets have been converted into cash, all secured creditors have been paid, and total
P50,000, is available to cover the following claims;

Accounts payable P30,000

Notes payable-unsecured 20,000
Interest on notes payable 2,000
Wages Payable 8,000
Taxes Payable 2,000
Liquidation expenses 4,000

2. Determine the amount available to unsecured creditors _______________

3. Compute the estimated deficiency ________________
4. Compute the expected recovery rate ______________

PROBLEM 3 Lagapak Company has been forced into bankruptcy and liquidity. Unsecured claims will be paid at the rate of P0.50 on the peso. Maga
company holds a non-interest bearing note receivable from Lagapak in the amount of P50,000, collateralized by machinery with a liquidation value of
P20,000.

5. The total amount to be realized by Maga on this note receivable is ______________

PROBLEM 4 Uniwide Company filed a voluntary bankruptcy petition on June 25, 2023, and the statement of affairs reflects the following amounts:
Book Carrying Amount Estimated Current Value
Assets:
Assets pledged with fully secured creditors 150,000 185,000
Assets pledged with partially secured creditors 90,000 70,000
Free Assets 210,000 160,000
Liabilities:
Liabilities with priority 35,000
Fully secured creditors 130,000
Partially secured creditors 100,000
Unsecured creditors 270,000

Assume the assets are converted into cash at the estimated current values, and the business is liquidated.

6. Total free assets will be ___________

7. Total net free assets will be ___________
8. Determine the amount to be available for unsecured claims without priority___________
9. Determine the amount of liabilities that may not be paid ______________
10. Determine the expected recovery per peso for unsecured claims___________

How much cash will be available to pay;

11. Fully secured creditors ___________
12. Partially secured creditors __________
13. Unsecured creditors without priority __________
14. Unsecured creditors with priority ______________

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PROBLEM 5 Losing company filed a voluntary bankruptcy petition on July 15, 2023 and the statement of affairs reflects the following amounts:
Book Value Estimated Current Value
Assets:
Assets pledged with fully secured creditors 160,000 190,000
Assets pledged with partially secured creditors 90,000 60,000
Free Assets 200,000 140,000
Liabilities
Liabilities with priority 20,000
Fully secured creditors 130,000
Partially secured creditors 100,000
Unsecured creditors 260,000

15. Determine the expected recovery per peso for unsecured claims___________

How much cash will be available to pay;

16. Fully secured creditors ___________
17. Partially secured creditors __________
18. Unsecured creditors without priority __________
19. Unsecured creditors with priority ______________

PROBLEM 6 Because of inability to pay its debts, the Nopay Manfacturing Company has been forced into bankruptcy as of April 1, 2023. The
balance sheet on the date shows;

Assets Liabilities and Equity

Cash P2,700 Accounts Payable P52,500
Accounts Receivable 39,350 Notes Payable-Bank 15,000
Notes Receivable 18,500 Notes payable-supplier 51,250
Merchandise Inventory 87,850 Accrued wages 1,850
Prepaid Insurance 950 Accrued taxes 4,650
Land and Building 61,250 Mortgage bonds payable 90,000
Equipment 48,800 Common stock-P100 par 75,000
________ Retained earnings (30,850)
P 259,400 P259,400

Additional information;
a. Accounts receivable of P16,950 and notes receivable of P12,500 are expected to be uncollectible. The good notes are pledged to the
bank.
b. Merchandise inventory are expected to bring in P45,100 when sold under bankruptcy conditions.
c. Land and Building have an appraised value of P95,000. They serve as security on the bonds.
d. The current value of the equipment, net of disposal cost is P9,000.

20. The estimated net loss/net gain on asset disposal is _____________

21. Estimated recovery rate for unsecured liabilities without priority is ______________
22. The estimated payment to unsecured creditors with priority is ___________
23. The estimated payment to partially secured liabilities _____________

PROBLEM 7. The following data were taken from the statement of affairs of MAGSANOC CORPORATION
Book value
Assets pledged for fully secured liabilities (current fair value, P75,000) P90,000
Assets pledged for partially secured liabilities (current fair value, P52,000) 74,000
Free assets (current fair value, P40,000) 70,000
Unsecured liabilities with priority 7,000
Fully secured liabilities 30,000
Partially secured liabilities 60,000
Unsecured liabilities without priority 112,000

24. Total net free assets will be ___________

25. Determine the amount of liabilities that may not be paid (Deficit) ______________
26. Determine the expected percentage of recovery for unsecured claims___________

How much cash will be available to pay;

27. Fully secured creditors ___________
28. Partially secured creditors __________
29. Unsecured creditors without priority __________
30. Unsecured creditors with priority ______________

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 NAME: _________________________________________, CPA SCORE: RANK
ACC 141-B

ANSWER SHEET

NO ERASURES ALLOWED
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10 20 30

SOLUTIONS: