Reference no: EM133179982

Questions -

Q1. Seico Inc. was forced to declare bankruptcy and is in the process of liquidating its assets and paying creditors' claims. Unsecured claims will be paid at the rate of forty centavos on the peso. Helen holds a P30,000 non-interest bearing note receivable from Seico collaterized by an asset with a book value of P35,000 and a liquidation value of P5,000. How much may Helen recover on this note?

a. P15,000

b. P5,000

c. P12,000

d. P17,000

Q2. ABC Corporation filed for bankruptcy. The following statements are correct except

a. Unsecured preferred liabilities have priority for payment over secured claims.

b. A voluntary proceeding is initiated by the debtor firm

c. Liquidation loss represents portion of claims that cannot be paid as the estimated cash is not sufficient for recovery of all claims.

d. A firm files for bankruptcy when its assets are insufficient to pay for its liabilities.