Reference no: EM132938989
Question - Sunday Co.'s financial position before the start of its liquidation is as follows:
ASSETS
Cash P 100,000
Accounts Receivable 600,000
Inventory 1,560,000
Land 800,000
Building 1,200,000
Equipment, net 400,000
Total 4,660,000
LIABILITIES AND EQUITY
Accounts Payable 1,600,000
Income Tax Payable 900,000
Note Payable (secured by equipment) 1 million
Loan Payable (secured by land & bldg) 1.2M
Share capital 2M
Retained earnings (deficit) (2.04M)
Total 4.660,000
Additional information:
Only 60% of the accounts receivable is collectible.
The entire inventory is expected to be sold half the price.
The land and building are expected to be sold at a lump sum price of P2,300,000.
The equipment is expected to be sold at its carrying amount but after refurbishment costs of P70,000.
Certain accounts payable are measured gross of P23,000 cash discount which Sunday intends to take. A supplier waived repayment of a P420,000 account.
The taxing authority gave Sunday a six-month tax amnesty to settle the tax liability for P780,000.
Interests of P80,000 and P70,000 are expected to be paid on the note and loan, respectively.
Liquidation costs of 120,000 are expected to be incurred.
Other government contributions of P160,000 not reflected on the balance sheet above, are expected to be paid.
Required - How much is the estimated deficiency to unsecured creditors without priority?