Gennia Mae H. Martinez
BSA 311
QUIZ - CORPORATE LIQUIDATION
Instruction: Submit with solution at b.fallarme@ph.fujitsu.com on or before November 6, 2017 –
8PM. Use your own email address, file name will be your own name.
The following data were taken from the statement of realization and liquidation of
XYZ Corporation for the quarter ended September 30, 2008:
Assets to be realized
Assets acquired
Assets realized
Assets not realized
Liabilities to be liquidated
Liabilities assumed
Liabilities liquidated
Liabilities not liquidated
Supplementary credits
Supplementary charges
The ending balances of capital stock and retained earnings are P300,000 and
P120,000,respectively.
P
330,000
360,000
420,000
150,000
540,000
180,000
360,000
450,000
510,000
468,000
What is the net income (loss) for the period? How much is the ending balance of cash?
A.
P168,000; P720,000
C. P(210,000); P560,000
B.
P(168,000); P720,000
D. P42,000; P560,000
A review of the assets and liabilities of G Company in bankruptcy on June 30, 2008,
discloses
the ff:
a. A mortgage payable of P118,000, is secured by building valued at P39,000 less
than its book value of P172,000.
b. Notes payable of P57,000 is secured by furniture and equipment with a book
value of P76,000 that is 3/5 realizable.
c. Assets other than those referred to have an estimated value of P44,000, an
amount that is 75% of its book value
d. Liabilities other than those referred to total P91,000, which included claims with
priority of P23,000.
How much was paid to the partially secured creditors?
A. P118,000
B. P23,000
C. P30,831
D. P50,769
How much was paid to the fully secured creditors?
A. P118,000
B. P23,000
C. P30,831
D. P50,769
How much was paid to the priority creditors?
A. P118,000
B. P23,000
C. P30,831
D. P50,769
How much was paid to the unsecured creditors?
A. P118,000
B. P23,000
C. P30,831
D. P50,769
To assist the trustee in a bankruptcy, a debtor must
a. collect and reduce to money any non-exempt property
b. file progress reports with the court
c. file a statement of affairs, consisting of answers to a series of questions regarding
debtor's financial condition
d. pay dividends to creditors with regards to priorities
Which of the following is not a duty of a trustee in a liquidation?
a.
b.
c.
d.
File proofs of claim with the bankruptcy court.
Investigate the financial affairs of the debtor.
Make payments to creditors as promptly as practicable with regard for priorities.
File reports of progress.
Put the following classes in the order allowed by the Bankruptcy Act, starting with the highest priority
to the lowest:
1)Expenses to administer estate
2)Tax claims of governmental units
3)Wages (including salaries and commissions) up to $10,000 earned within 180 days
4)deposits up to $1,800 each for goods or services never received from the debtor
a.
b.
c.
d.
1,3,4,2
3,1,2,4
4,2,1,3
2,1,3,4
The document used to estimate amounts available to each class of claims is called a(n)
a. Statement of Assets and Liabilities
b. Legal Statement of Affairs
c. Accounting Statement of Affairs
d. Statement of Realization and Liquidation.
Which of the following does not describe the accounting statement of affairs?
a. the emphasis is on asset net realizable value, not historical cost
b. the statement of affairs is concerned only with the assets of the debtor organization,
not the claims
c. the statement can also be used in a reorganization
d. the statement of affairs is based on estimated values; actual realized values may be different
Lakeside Bank holds a $100,000 note secured by a building owned by Fly-By-Night
Manufacturing, which has filed for bankruptcy under Chapter 7 of the Bankruptcy Code. If the
property has a book value of $120,000 and a fair market value of $90,000, what is the best way
to describe the note held by Second City Bank? The bank has a(n)
a.
b.
c.
d.
secured claim of $100,000.
unsecured claim of $100,000.
secured claim of $90,000 and an unsecured claim of $10,000.
secured claim of $100,000 and an unsecured claim of $20,000.
In the accounting statement of affairs, the gains or losses upon liquidation would equal
a.
b.
c.
d.
net book value of assets minus book value of liabilities.
the book value of assets minus their realizable value.
total estimated realizable value of assets minus the amount assigned to secured creditors.
total estimated realizable value of assets minus the amount remaining for Class 7 unsecured
creditors.
A corporation's accounting statement of affairs shows a dividend of 115%. The dividend means
that
a.
b.
c.
d.
secured creditors will receive an amount in excess of the book value of their claims.
unsecured creditors will receive an amount in excess of the book value of their claims.
stockholders may expect some return on their interests.
an error was made in the preparation of the statement.
The ratio called "dividend to general unsecured creditors" is calculated by which of the following
formulas?
a. Estimated amount available for unsecured creditors with/without priority
divided by total claims of all unsecured creditors with/without priority
b. Estimated realizable value of all debtor assets divided by book value of debtor assets
c. Estimated gain/loss on liquidation divided by total estimated net realizable value of debtor
assets
d. Net estimated proceeds available to unsecured creditors without priority divided by
total claims of unsecured creditors without priority.
A corporation's accounting statement of affairs shows a dividend of 40%. The dividend means
that
a. all creditors and stockholders will receive approximately 40% of the book value of their
respective interests.
b. all creditors will receive an amount approximately equal to 40% of the book value of their
claims, but stockholders will receive nothing.
c. Unsecured claims with priority will receive 40% of the book value of their respective claims.
d. Unsecured claims without priority will receive 40% of the book value of their
respective claims
The Statement of Realization and Liquidation differs from the Statement of Affairs because
a. the Statement of Realization and Liquidation reports estimated realizable values rather than
actual liquidation results.
b. the Statement of Realization and Liquidation is a summary of secured debt activity only.
c. the Statement of Realization and Liquidation is prepared only at final completion of the
liquidation process.
d. the Statement of Realization and Liquidation reports actual liquidation results rather
than estimated realizable values.
The document used by a trustee to report periodically on the status of fiduciary activities is called a(n)
a.
b.
c.
d.
Statement of Assets and Liabilities.
Legal Statement of Affairs.
Accounting Statement of Affairs.
Statement of Realization and Liquidation.
Equipment with a book values of $120,000 is sold in a liquidation process for cash of $110,000. This
equipment was security for a$150,000 bank loan. Any remainder is consider unsecured without
priority. How would this transaction be reported on the Statement of Realization and Liquidation?
a. A reduction in noncash assets of $120,000
b. A loss reported to owner's equity of $10,000
c. A disbursement of cash to the bank of $110,000, a reduction in partially secured liability of
$150,000, and an increase in unsecured without priority liability of $40,000
d. all of the above would occur
SOLUTIONS:
1. XYZ Company
Assets to be realized
Assets Acquired
Liabilities Liquidated
Liabilities not Liquidated
Supplementary Debits.
330,000.00
360,000.00
360,000.00
450,000.00
468,000.00
1,968,000.00
Assets Realized
Assets not realized.
Liabilities to be Liquidated
Liabilities Assumed
Supplementary Credits
Net Loss
420,000.00
150,000.00
540,000.00
180,000.00
510,000.00
1,800,000.00
168,000.00
2. G Company
Assets
APFSC-FSC
Unpledged Assets
Total Free Assetes
15,000
44,000
59,000
Liabilities
PSC-APPSC
Unsecured Creditors
Priority Creditors
Unsecured
11,400
68,000
23,000
Priority
Deficiency
79,400
23,000
(43,400)
Recovery Rate = Available Assets / Unsecured Creditors
Recovery Rate = (59-23) / 79.4
Recovery Rate = 0.45
Fully Secured Creditors = 100% of amount owed FSC
118,000
Priority Creditors = 100% of amount owed to Priority Creditors
23,000
Partially Secured Creditors = 100% of APPSC + ((PSC-APPSC) x Rec. Rate)
50,769
Unsecured Creditors = 100% of amount owed to Unsecured Creditors x Rec. Rate
30,831