Reference no: EM132943548

Question - Sunday Co.'s financial position before the start of its liquidation is as follows:

ASSETS

Cash P100,000

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 4.66M

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.

How much is the estimated deficiency to unsecured creditors without priority?