Advanced Accounting Part 1

Quiz

Problem A
AA
Capital Balances 30,000
Investment (Cash disbursement) 62,275
Withdrawal (Cash receipts) (79,100)
Adjusted Capital balances 13,175
Add: Earnings ( Increase in assets) 12,825
Total assets available after liabilities 26,000

Answer
1.) 26,000

Problem B Other Set of Quiz

Total partners interest

AA 40,000
BB 80,000
CC 45,000
Add: Unpaid liabilities
Loss on realization

Note: Unpaid Claims = Loss on Realization

Answer
2.) 215,000

Problem B Set F337, A335, A339

Computation of Partners' interest balances J
Beginning balances 252,000
Salaries - first quarter - salaries payable 33,600
Share in net income
Salaries - one month 11,200
Remainder 78,500
Share in net income 89,700
Loan receivables from A
Partners' interest 375,300

Cash priority program

 J
Partners' interest 375,300
Divided by: P & L Ratio 25%
Maximum loss absorption capacity 1,501,200
Priority I
Balances 1,501,200
Priority II 500,400
Balances 1,000,800

Computation of cash paid to partners

J
Priority I
Priority II 125,100
All partners 150,000
Total 275,100

Solution:

Cash paid to outside creditors

Cash paid to liquidating expenses
Cash to be withheld
Cash paid to partners
Total cash needed
Less: Cash on hand
Cash proceed from sale of non cash assets

2.) 1,115,000

Solution:
Non-Cash Assets - Carrying value
Partners Interest
Liabilities - outside creditor
Total assets 615,000
Less: Cash on hand
Non-cash assets to be realized
Proceeds
Loss on sale of assets

3.) C
Paid to outside creditors
Cash withheld for the unpaid liabilities - outside creditors
Paid to partners
 Total cash paid to creditors and partners including cash withheld

4.) 365,000

5.) Partner C

6.) 954,200

7.) 275,100

8.) 379,100

9.) 300,000
BB Total
20,000 50,000
70,695 132,970
(65,245) (144,345)
25,450 38,625
8,550 21,375
34,000 60,000

165,000
50,000
215,000

A C Total
368,000 305,000 925,000
39,600 28,800 102,000

13,200 9,600 34,000

78,500 157,000 314,000
91,700 166,600 348,000
(20,000) (20,000)
479,300 500,400 ###
 A C
479,300 500,400
25% 50%
1,917,200 1,000,800
416,000
1,501,200 1,000,800
500,400
1,000,800 1,000,800

A C Total
104,000 104,000
125,100 250,200
150,000 300,000 600,000
379,100 300,000 954,200

75,000
35,800
300,000
954,200
1,365,000
250,000
1,115,000

1,355,000
375,000
1,730,000
250,000
1,480,000
1,115,000
365,000

75,000
300,000
954,200
1,329,200
Advanced Accounting Part 1
Quiz

Problem A 45%
Safepayment Mode James
Capital Balances 694,000
Loan Payable to James 44,000
Partner's Interests 738,000
Gain on Realization 25,200
Balances 763,200
Total Maximum Possible Losses*** (547,200)
Payments to Partner for the month of January 216,000

*** Cash balance before liquidation 268,000

Proceeds 926,800
Payments to outside creditors (532,000)
Payments to Liquidating expense -
Cash withheld, end (146,800)
Payments to partners 516,000

1.) C
2.) 216,000
3.) 1,216,000 includes payments to outside creditors and to partners, P532,000 and 516,000.
Cash withheld, January
Future Liquidating expense -
Unpaid recorded liabilities -
Unrecorded liabilities 146,800 146,800
Unrealized Noncash assets 1,069,200
Total Maximum Possible Losses 1,216,000

For clarification: UNRECORDED LIABILITIES will be considered as part of cash withheld and POSSIBLE LOSSES

4.) 926,800
5.) 600,520
Cash withheld, beg 146,800
Proceeds 641,520
Payments to outside creditors (146,800)
Payments to Liquidating expense 34,000
Cash withheld, end (75,000)
Payments to partners 600,520
6.) 270,234

Safepayment Mode James

Capital Balances 547,200
Loss (276,966)
 Final Payment to partners 270,234

Problem B 25%
James
Capital Balances 1,120,000
Share in Net Loss
Salaries 240,000
Balances (272,000)
Net Loss (32,000)
Capital balances after distribution of net loss 1,088,000
Receivables from Partners (44,000)
Loan Payables to Partners -
Partner's Interests 1,044,000
Gain on Realization 18,000
Payment of Liquidation Expenses (31,000)
Balances 1,031,000
Total Maximum Possible Losses (395,000)
Payments to Partner for the month of Cash 636,000

7.) D
8.) 2,856,000
Cash balance before liquidation 420,000
Proceeds 3,381,000
Payments to outside creditors (516,000)
Payments to Liquidating expense (124,000)
Cash withheld, end (305,000)
Payments to partners 2,856,000

9.) 3,381,000
10.) 3,309,000
Proceeds 3,381,000
Less: Gain on Realization (72,000)
Book value of sold noncash assets 3,309,000

11.) 305,000

Problem C 50%
James
 Capital Balances 220,000
Receivables from Partners -
Loan Payables to Partners -
Partner's Interests 220,000
Loss on Realization (17,500)
Payment of Liquidation Expenses (5,000)
Balances 197,500
Total Maximum Possible Losses (122,500)
Payments to Partner for the month of Cash 75,000

Cash balance before liquidation 120,000

Proceeds 345,000
Payments to outside creditors (74,000)
Payments to Liquidating expense (10,000)
Cash withheld, end (156,000)
Payments to partners 225,000

12.) 225,000
13.) 156,000
14.) 67,500 James
75,000 Bosh

15.) 45,000

50%
2nd/last installment James
Capital Balances 122,500
Loss on Realization (20,000)
Payment of Liquidation Expenses *** (22,500)
Final Settlement 80,000

Cash withheld, beg 156,000

Proceeds 175,000
Payments to outside creditors (126,000)
Payments to Liquidating expense (45,000)
Cash withheld, end -
Payments to partners 160,000
 15% 40%
Wade Bosh Total
354,000 584,000 1,632,000
- - 44,000
354,000 584,000 1,676,000
8,400 22,400 56,000
362,400 606,400 1,732,000
(182,400) (486,400) (1,216,000)
180,000 120,000 516,000

000 and 516,000.

eld and POSSIBLE LOSSES

Wade Bosh Total

182,400 486,400 1,216,000
(92,322) (246,192) (615,480)
 90,078 240,208 600,520

15% 60%
Wade Bosh Total
1,632,000 2,240,000 4,992,000

240,000 240,000 720,000

(163,200) (652,800) (1,088,000)
76,800 (412,800) (368,000)
1,708,800 1,827,200 4,624,000
(192,000) - (236,000)
- 100,000 100,000
1,516,800 1,927,200 4,488,000
10,800 43,200 72,000
(18,600) (74,400) (124,000)
1,509,000 1,896,000 4,436,000
(237,000) (948,000) (1,580,000)
1,272,000 948,000 2,856,000

25% 25%
Wade Bosh Total
 155,000 140,000 515,000
- - -
- - -
155,000 140,000 515,000
(8,750) (8,750) (35,000)
(2,500) (2,500) (10,000)
143,750 128,750 470,000
(61,250) (61,250) (245,000)
82,500 67,500 225,000

25% 25%
Wade Bosh Total
61,250 61,250 245,000
(10,000) (10,000) (40,000)
(11,250) (11,250) (45,000)
40,000 40,000 160,000
ADVANCED ACCOUNTING PART 1

Problem A

Fully secured Creditors

Notes payable 110,000

Less: Land 120,000

Free assets
Cash 30,000
Accounts receivable 15,000
Inventory 39,000
Total free assets
Less: Liabilities with priority
Salaries Payable
Net free assets

Partial secured creditors

Bonds Payable 300,000

Less: Building 180,000

Unsecured liabilities without priority

Accounts payable 90,000
Total Unsecured liabilities without priority
Defficiency

Expected recovery rate (Net free Assets / Total Unsecured liabilities without prioirty)

Deficiency rate (Defficiency / Total Unsecured liabilities without priority)

Claims
Fully secured creditors 110,000.00
Partially secured creditors 300,000.00
Unsecured liabilities with priority 10,000.00
Unsecured liabilities without priority 90,000.00
510,000.00

Cash
Accounts receivable
Inventory
 Building
Land
Total realizable value

1.) Compute the estimated amount available to unsecured creditors (with and without priority)/total free assets

Cash received:
Unsecured creditors with priority
Unsecured creditors without priority (150,000 * 56%)
Total cash received by unsecured claims ( Total free assets)

Alternative Solutions
Free Assets
Cash
Accounts Receivable
Inventory
Free Assets from Fully Pledged Assets - Land
Total Free Assets

1.) Compute the estimated amount available to unsecured creditors without priority / net free assets

Unsecured creditors without priority (150,000 * 56%) / net free assets

Alternative Solutions
Total Free Assets
Less: Liabilities with Priorities
Net Free Assets

Computation of recovery for each class of creditors

Claims

Fully secured creditors 110,000

Partially secured creditors 300,000
Unsecured liabilities with priority 10,000
Unsecured liabilities without priority 90,000
510,000

Total assets measured at Net realizable value

Pledged assets
Free assets
Total

2.) Compute the amount of unsecured creditors without priority

3.) Compute the dividend to unsecured creditors without priority
4.) Compute the estimated payment to fully secured creditors
5.) Compute the estimated amount to partially secured creditors
6.) Compute the estimated amount to unsecured creditors with priority
7.) How much is the estimated amount to unsecured creditors without priority
8.) How much will be paid to each of the following?
a. Salaries Payable - unsecured creditor with priority
b. Accounts Payable - unsecured creditor without priority
c. Note Payable - fully secured creditor
d. Bonds Payable - partially secured creditor
9.) Compute the estimated deficiency to unsecured creditors (100%-56%)
1.) Compute the estimated gain or loss on realization of assets

Gain on realization of assets

Loss on realization of assets

Carrying value Realizable value

Cash 30,000 30,000
Accounts receivable 50,000 15,000
Inventory 90,000 39,000
Building 200,000 180,000
Land 100,000 120,000
Balances

12.) Compute the estimated net loss

Net Loss on Realization of Assets
Add: Gain due to condonation of bonds
Unpaid balance 120000
Multiply by 50%
Tota estimated net loss

Problem B
ASSETS TO BE REALIZED ASSETS REALIZED
Old Receivables, net 50,000 Old Receivables
Marketable Securities 20,000 New Receivables
Old Inventory 72,000 Marketable Securities
Depreciable Assets, net 120,000 Sales of Inventory
Total 262,000 Total

ASSETS ACQUIRED ASSETS NOT REALIZED

New Receivables 100,000 Old Receivables, net
New Receivables
Depreciabel Assets
Total 100,000 Total

LIABILITIES LIQUIDATED LIABILITIES TO BE LIQUIDATED

Old Current Payables 31,000 Old Current Payables

LIABILITIES NOT LIQUIDATED LIABILITIES INCURRED

 Old Current Payables 34,000

SUPPLEMENTARY CHARGES SUPPLEMENTARY CREDITS

Cost of Sales 72,000 Revenue
Depreciation Expenses 24,000
Expenses paid 6,000
Total 102,000 Total

TOTAL 529,000 TOTAL

NET LOSS (3,000)
 Free Assets

10,000

84,000
94,000

10000
84,000

Liabilities without
Priority

60,000

90,000
150,000
(66,000)

56.00%

44.00%

Recovery Recovery Rate

110,000.00 100.00%
213,600.00 71.20%
10,000.00 100.00%
50,400.00 56.00%
384,000.00

30,000.00
15,000.00
39,000.00
 180,000.00
120,000.00
384,000.00

out priority)/total free assets -

10,000
84,000
94,000

30,000
15,000
39,000
10,000
94,000

y / net free assets

84,000

94,000
10,000
84,000

Recovery
Recovery Rate
110,000 100.00%
213,600 71.20%
10,000 100.00%
50,400 56.00%
384,000

300,000
84,000
384,000

84,000
56.00%
110,000
213,600
 10,000
50,400

10,000
36,000
110,000
213,600
44.00% (66,000)

20,000
(106,000)

Gain Loss Net gain

- - -
- (35,000) (35,000)
- (51,000) (51,000)
- (20,000) (20,000)
20,000 - 20,000
20,000 (106,000) (86,000)

(26,000)
(86,000)

60000
(26,000)

Old Receivables 28,000

New Receivables 65,000
Marketable Securities 15,000
Sales of Inventory 100,000
208,000

Old Receivables, net 22,000

New Receivables 35,000
Depreciabel Assets 96,000
153,000

O BE LIQUIDATED
Old Current Payables 65,000

-
TARY CREDITS
100,000
-
-
100,000

526,000