CORPORATE LIQUIDATION PARIL/TANG

PROBLEM A:
The ABC Corporation, which is undergoing liquidation, has the following condensed balance sheet as of December
31, 2018:
Assets Liabilities and Shareholders' Equity
Cash and cash equivalents P 1,584,000 Salaries payable P 480,000)
Receivables, net 3,696,000 Accounts payable 660,000)
Inventory 924,000 Bonds payable 680,000)
Prepaid expenses 252,000 Bank loan payable 5,200,000)
Equipment, net 2,800,000 Notes payable 2,376,000)
Furniture 800,000 Ordinary shares 960,000)
Goodwill 240,000 Deficit (P00,060,000)
Total P10,296,000 Total P10,296,000)

Additional information:
 The bonds payable was secured by furniture with realizable amount of P720,000 while the entire receivable
with realizable amount of P3,600,000 was used as a collateral for the bank loan payable.
 Notes payable was secured by equipment with realizable value of P2,376,000.
 Inventory was estimated to be sold for P804,000.
 Liquidation expenses incurred by the trustee amounted to P80,000 and unrecorded tax payable amounted to
P60,000.

REQUIRED:
1. How much is the net free assets?
2. How much is the estimated deficiency to unsecured creditors?
3. How much is the estimated payment to partially secured creditors?
4. How much is the estimated recovery percentage?
5. How much is the estimated recovery percentage for partially secured liabilities?

PROBLEM B:
ABC Corporation is undergoing liquidation. The trustee of ABC Corp. presents the following
information:
 P320,000 assets are available to all unsecured liabilities, P40,000 of which represents inventories. It was
ascertained that only inventories were not pledged to any liabilities.
 Unpaid liabilities with priority are as follows: administrative expenses, P14,000; taxes, P24,000; and
wages, P10,000.
 Accounts payable and notes payable totaled P400,000. No assets were pledged on the said liabilities.
 Payment to fully secured creditors and partially secured creditors amount to P272,000 and P540,000,
respectively.
 The estimated recovery percentage is 35%.

REQUIRED:
1. How much is the assets pledged to fully secured liabilities at realizable value?
2. How much is the assets pledged to partially secured liabilities at realizable value?

PROBLEM C:
The following data were taken from the statement of realization and liquidation of ABC Corporation for the quarter
ended June 30, 2018:
Liabilities to be liquidated P 86,200
Supplementary charges 13,870
Liabilities not liquidated 36,800
Supplementary credits 6,980
 Assets acquired 38,400
Liabilities liquidated 53,320
Assets to be realized 123,250
Assets realized 33,600
Liabilities assumed 12,820
Net loss 8,590

The beginning capital balances of ordinary shares and retained earnings are P82,000 and P29,600, respectively.

REQUIRED: How much is the ending cash balance?

PROBLEM D:
The ABC Company had a bad financial condition caused by deficiency of liquid asset. On June 30, 2018, the
following information was available:
Cash P112,000
Accounts receivable 80,000
Inventory 160,000
Investment in equity securities 26,400
Land 98,000
Building 60,000
Equipment 48,000
Accounts payable 278,000
Notes payable 234,000
Salaries payable 40,000
Taxes payable 18,000
Bank loan payable 188,000
Estate equity (deficit) ?

During the six-month period ending December 31, 2018, the trustee sold the investment in equity security for
P26,000; sold all inventories on account for P150,000, and paid off P26,000 of the bank loan and all liabilities with
priorities (salaries and taxes) as well as P 7,500 for estate administration expense.
During the six-month period ending June 30, 2019, the trustee realized P 210,000 for accounts receivable; sold land
for 88,000; sold equipment for P 40,000; then paid the balance of bank loan and half of the notes payable;
administration fee of P6,000 was paid.

REQUIRED:
1. How much is the net income (loss) for the six months period ending December 31, 2018?
2. How much is the estate deficit as of December 31, 2018?
3. How much is the cash balance as of December 31, 2018?
4. How much is the net income (loss) for the six months period ending June 30, 2019?
5. How much is the estate deficit as of June 30, 2019?
6. How much is the cash balance as of June 30, 2019?