ABC Co

Statement Of Finncial Position

June 30, 2016

ASSETS
Current assets
Cash 2,000
Marcektable securities 15,000
Accounts receivable 23,000
Inventory 41,000
Prepaid expense 3,000 84,000
Property, plant and equipment
Land 100,000
Building 110,000
Equipment 80,000 290,000

Intangible assets 15,000

Total assets 389,000

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilitie
Notes payable (secured by inventory) 75,000
Accounts payable 60,000
Accrued expenses 18,000 153,000
Long term liabilities
Notes payable (secured by land and bldg) 200,000

Stockholders' equity
Capital stock 100,000
Retained earnings (deficit) (64,000) 36,000
389,000

ABC Co
Statement of Affairs
June 30, 2016 Estimated
Book Values ASSETS RV
Pledged with fully secured creditors:
210,000 Land and Building 231,000
Less: Notes payable (long term) (200,000)
Interest payable (5,000)
Pledged with partially secured creditor:
41,000 Inventory 43,000
Free assets
 2,000 Cash 2,000
15,000 Marketable securities 20,000
- Dividends receivable 500
23,000 Accounts receivable 12,000
3,000 Prepaid expenses 1,000
80,000 Equipment 32,000
15,000 Intangible assets -
Total free assets
Less: liabilities with priority)
Net free assets
Estimated deficiency
389,000
LIABILITIES AND STOCKHOLDERS' EQUITY Secured and
Book values Priority claims
Liabilities with priority:
- Administrative expense 21,500
12,000 Accrued salaries 12,000
3,000 Withholding tax payable 3,000
36,500
Fully secrued creditors
200,000 Notes payable (long term) 200,000
Interest payable 5,000
205,000
Partially secured creditors
75,000 Notes payable 75,000
Less: Inventory (43,000)
Unsecrued creditors
60,000 Accounts payable 60,000
3,000 Accrued expenses 3,000
36,000 Stockholders' equity
389,000

Expected Recovery:

Net Free assets 57,000

Unsecured liab 95,000

= 60%

Estimated Amounts to be recovered by Creditors

Estimated
Class of Creditors Total claims Allocation Recovery

Unsecrued with priority 36,500 100% 36,500

Fully secured 205,000 100% 205,000
Partially secured 75,000 43,000+(32,000 x 60%) 62,200
Unsecured without priority 63,000 60% 37,800
379,500 341,500

Estimated deficiency 38,000

 The following information has been obtained about the company
1) The marketable securities reported on the balance sheet has appreciated in value
since being acquired and is now worth P20,000. Dividends of P500 are currently
due from this investment
2) P12,000 of the company's accounts receivable can still be collected
3) The inventory held by the company can be sold for P43,000
4) A refund Of P1,000 will be received from the various prepaid expenses but the
company's intangible assets have no resale value
5) The landa nd building can still be sold for P231,000. While the equipment can only
be sold for P32,000
6) Administrative expenses of P21,500 are estimated if liquidation of the company does
occur
7) Accrued expenses include salaries of P12,000 and payroll taxes from wages but not
yet paid to the govt total P3,000
8) Interest of P5,000 on the company's long-term liabilities has not been accrued for
the first six months of 2016.

Assume that, SGV was appointed as the trustee

Entry to take up transfer of ABC assets and liabilities in the trustee books

Cash 2,000
Marcektable securities 15,000
Accounts receivable 23,000
Inventory 41,000
Prepaid expense 3,000
Land 100,000
Building 110,000
Equipment 80,000
Intangible assets 15,000
Notes payable 75,000
Accounts payable 60,000
Accrued expenses 18,000
Long term notes payable 200,000
Available Estate equity 36,000
for Unsecured creditors
Estate equity 4,500
Dividends receivable 500
Interest payable 5,000
26,000
Trustee's transactions during the first month
-
1. The trustee expends P7,000 to sell the inventory at a price of P51,000. The
 applied to the notes payable for which the inventory has served as parti

Cash 44000
Inventory
Estate equity

67,500 Notes payable 44000

93,500 Cash
(36,500)
57,000 2. Collections is made of the P500 cash dividend accrued as of June 30. The
38,000 reported at P15,000 are then sold for P19,600
95,000
Cash 20,100
Marketable securities
Dividends receivable
Estate equity

3. Accounts receivable of P16,000 are collected. The remaining balance is w

Cash 16,000
Estate equity 7,000
Accounts receivable

4. The trustee determines that no refund is available from any of the compa
The intangible assets are also removed from the accounting records beca

32,000 Estate equity 28,000

Prepaid expense
Intangible assets
63,000
- 5. The land and builidng are sold for P208,000 with P205,000 of this money
95,000 the secured creditors

Cash 208,000
Estate equity 2,000
Land
Buiding

Notes payable 200,000

Interest payable 5,000
Cash

6. The equipment is sold for P42,000 cash

Cash 42,000
 Estate equity 38,000
Equipment

7. Various administrative expenses of P24,900 are paid

Estate equity 24,900

Cash
t has appreciated in value
nds of P500 are currently

paid expenses but the

le the equipment can only

dation of the company does

taxes from wages but not

has not been accrued for

trustee books

ory at a price of P51,000. The net cash is

 nventory has served as partial security

41000
3000

44000

accrued as of June 30. The related investment

15,000
500
4,600

The remaining balance is written off as bad debts

23,000

lable from any of the company's prepaid expense.

the accounting records because they have no cash value

3,000
25,000

with P205,000 of this money was used to pay off

100,000
110,000

205,000
80,000

24,900