Reference no: EM132701158

Question - Debt Co's financial position prior to liquidation is as follows:

ASSETS LIABILITIES AND EQUITY

Cash 80,000 Accrued expenses 442,000

Accounts Receivable 440,000 Current tax payable 700,000

Note receivable 200,000 Accounts payable 2,000,000

Inventory 1,060,000 Note payable 600,000

Prepaid assets 20,000 Loan payable 4,000,000

Land 1,000,000 Share capital 1,000,000

Building, net 4,000,000 Retained earnings (deficit) (1,342,000)

Equipment, net 600,000

Total 7,400,000 7,400,000

Additional information:

a. 24% of the accounts receivable is uncollectible.

b. The note is fully collectible. In addition, P20,000 interest is expected to be received.

c. The inventory's estimated selling price and costs to sell are P840,000 and P20,000, respectively.

d. The prepaid assets are non-refundable.

e. The land and building, which are pledged as securities for the P4,000,000 loan, are expected to be sold at a package price of 5,200,000. An additional P30,000 is expected to be paid for the interest on the loan.

f. The equipment, which has a net selling price of P400,000, is pledged as security for the note payable.

g. Administrative expenses P60,000 are expected to be incurred in the liquidation process.

h. The accrued expenses include salaries payable of P50,000.

i. The other liabilities are expected to be settled equal to their carrying amounts.

Requirements - Compute the following requirements using excel format:

a. Prepare the statement of affairs.

b. Compute for the estimated deficiency.

c. Compute for the estimated recovery percentage of unsecured creditors without priority.

d. Mr. A, a supplier, has an outstanding account receivable of P500,000 from Debt Co. How much can Mr. A expect to recover from his claim?