CORPORATE LIQUIDATION

1. The following information is taken from the Statement of Affairs of XYZ Corp.:
Assets pledged with fully secured liabilities (fair market value P75,000) P90,000
Assets pledged with partially sec. Liabilities (fair market 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

The estimated amount payable to unsecured creditors without priority is:

The estimated amount payable to partially secured creditors is:

2. Intel Company is being liquidated. The trustee has determined that the unsecured claims will receive P0.35 on the
peso. Advanced Company holds a P1,000,000 mortgage note receivable from Intel Company that is secured by trading
securities with P750,000 carrying value having a market value of P820,000. How much will Advanced Company
expects to recover from Intel?

3. The following data were taken from the statement of realization and liquidation of Light Company for the quarter
ended September 30, 2013.
Liabilities to be liquidated P1,425,000
Supplementary charges 845,500
Liabilities not liquidated 1,050,000
Supplementary credits 962,500
Assets acquired 680,000
Liabilities liquidated 790,000
Assets to be realized 537,500
Assets realized 875,000
Liabilities assumed 415,000

The beginning balances of ordinary shares and retained earnings are P510,000 and P148,000, respectively. The net
income for the period is P437,000. How much is the ending cash balance?

4. The following information are related to Greek Corporation which is undergoing liquidation:
a. Bonds payable amounting to P73,600 is secured by merchandise inventory with book value of P123,000 and net
realizable value of 2/3 of recorded amount.
b. Of the P195,600 accounts payable, P55,000 is secured by equipment with carrying amount of P76,800 which is
70% realizable.
c. Building with carrying amount of P129,000 has a net realizable value of P99,000.
d. Other unrecorded liabilities are accrued interest on bonds, P3,100; salaries payable, P17,400; taxes payable,
P11,600 and trustee’s fee, P8,500.
e. Cash available prior to liquidation amounts to P11,900.
f. Total assets of Greek Corporation presented in the Statement of Financial Position prior to liquidation amounts to
P480,000 .Remaining assets other than those whose realizable value were mentioned above have NRV of 60% of
recorded amount, except for prepaid expenses and goodwill amounting to P7,600 and P22,000, respectively
g. Total liabilities of the company prior to liquidation amounts to P380,000.

Compute for the estimated deficiency to unsecured liabilities _____

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 5. The Statement of Affairs of Three-Ten Company contained the following relevant information:
Assets pledged with fully secured creditors 1,500,000
Assets pledged with partially secured creditors 800,000
Free Assets 900,000
Liabilities with priority 200,000
Fully secured liabilities 1,000,000
Partially secured liabilities 1,500,000
Unsecured creditors without priority 1,300,000

The estimated deficiency to unsecured claims is _____________

What is the percentage of recovery of partially secured liabilities? _____________

6. A Statement of Realization and Liquidation has been prepared for Lugina Company. The totals are given below:

Assets to be realized 60,000 Liabilities assumed 50,000

Assets acquired 40,000 Liabilities not liquidated 65,000
Assets realized 55,000 Supplementary credits 110,000
Liabilities to be liquidated 80,000

Retained earnings decreased by P12,000. The ending balance of Share Capital and Retained Earnings are P100,000 and
(P85,000), respectively. How much is the beginning cash balance? _____________

7. The following are the data presented by Calculator Company:

Assets at book value 1,250,000
Assets at net realizable value 937,500
Liabilities at book value:
Fully secured mortgage 500,000
Unsecured accounts and notes payable 562,500
Unrecorded Liabilities:
Interest on notes 3,125
Administrative expenses 50,000

The estimated deficiency and percentage of recovery of unsecured without priority is ________

8. A Statement of Realization and Liquidation has been prepared for Three-Six Company. The totals are given below:

Assets to be realized 60,000 Liabilities assumed 50,000

Assets acquired 40,000 Liabilities not liquidated 65,000
Assets not realized 80,000 Supplementary credits 110,000
Liabilities to be liquidated 80,000 Supplementary charges ?

Retained earnings increased to P15,000. The beginning balance of Share Capital and Retained Earnings are P100,000
and (P85,000), respectively. How much is the ending cash balance?

9. In corporate liquidation, creditors having priority are what type of creditors?

a. Secured Creditors: YES Unsecured Creditors: YES
b. Secured Creditors: YES Unsecured Creditors: NO
c. Secured Creditors: NO Unsecured Creditors: YES
d. Secured Creditors: NO Unsecured Creditors: NO

10. How are anticipated administrative expenses reported on a statement of affairs?

a. As a liability with priority c. As a footnote until actually incurred
b. As unsecured liability d. Not recognized

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 11. Losing Company filed a voluntary bankruptcy petition on Jan 25, 2017, and the statement of affairs reflected the
following amounts:
Book Values Est. NRV
Assets:
Pledged with fully secured creditors P150,000 P185,000
Pledged with partially secured creditors 90,000 60,000
Free Assets 210,000 160,000
Liabilities:
With priority P35,000
Fully secured creditors 130,000
Partially secured creditors 100,000
Unsecured creditors 270,000

How much is the estimated deficiency to unsecured non-priority credits?

12. Unfaithful, Inc. is undergoing liquidation since January 1, 2017. Its condensed statement of realization and
liquidation as of March 31, 2017, showed:

Assets to be realized P1,375,000 Liabilities not liquidated P1,700,000

Assets acquired 250,000 Liabilities to be liquidated 2,250,000
Assets realized 1,200,000 Liabilities assumed 1,625,000
Assets not realized 400,000 Supplementary charges 500,000
Liabilities liquidated 1,875,000 Supplementary credits 655,000

The net gain (loss) for the three month-month period ending March 31, 2017 was: _____
If cash balance at the end is P1,500,000, how much is the shareholders’ equity On January 1, 2017? ______

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