Quiz -corporate liquidation
Multiple choice: Encircle the best answer. Solution is necessary.
1. The following data were presented in the statement of affairs for BW Company
Unsecured liabilities without priority P900,000
Stockholders’ equity 360,000
Loss on realization of assets 450,000
Estimated administrative expenses that have not been
Recorded 45,000
Unsecured liabilities with priority 100,000
Based on the foregoing data, what percentage of their claims should unsecured, without
priority creditors expect to receive on the liquidation of BW Company?
a. 85%
b. 90%
c. 86.5%
d. 100%
2. The First Family Bank loaned P4,000,000 to Belle Corporation. The loan is secured by a
land with a book value and fair value of P5,000,000 and P3,000,000, respectively. What
amount will the bank received if unsecured creditors received 25% of their claims?
a. P1,000,000
b. P3,000,000
c. P3,250,000
d. P4,000,000
3. Lucky Company has filed for liquidation. The following data is available:
Free assets at net realizable value P100,000
Liabilities per books (unsecured) 160,000
Unrecorded liabilities:
Liquidation expenses 6,000
Unpaid wages with priority claim 10,000
What percentage of their claims should the unsecured creditors receive in liquidation?
a. 62.5%
b. 56.82%
c. 55.29%
d. 52.5%
4. The Abu company in liquidation provided the following data:
Assets at book value P100,000
Assets at net realizable value 75,000
Liabilities at book value 85,000
Unrecorded liabilities: interest on bank notes 250
Liquidation expenses 4,000
Assuming the assets are sold at realizable values, what is the balance of the Estate account
at the end of the period?
a. P14,250
b. P15,750
c. P13,750
d. P14,000
5. The following are the data presented by Ilocos Company:
Assets at book value P1,000,000
Assets at net realizable value 750,000
Liabilities at book value:
Fully secured mortgage 400,000
Unsecured accounts and notes payable 450,000
Unrecorded liabilities:
Interest on bank notes 2,500
Estimated administrative expenses 40,000
The statement of affairs at this time should include an estimated deficiency to unsecured
creditors of:
a. P350,000
b. P310,000
c. P142,500
d. P100,000
6. Sayap Company signed a note payable to its bank for P2,000,000. Accrued interest on the
note on February 29, 2019 amounts to P50,000. The note is secured by inventory with a book
value of P2,300,000. The inventory is sold for P1,600,000 and unsecured creditors receive 30%
of their claims. What amount should the bank receive in settlement of the note and interest.
a. P2,050,000
b. P2,000,000
c. P1,705,000
d. P1,600,000
7. The Rizal Company provides the following information on November 13, 2019:
Office building at original cost P1,000,000
Accumulated depreciation on office building 200,000
Land at original cost 300,000
Office building and land at net realizable value 1,500,000
Mortgage payable, secured by office building and land 850,000
Interest accrued on mortgage payable to November 13, 2019 5,000
The estimated amount available from the building and land for the settlement of unsecured
creditors is
a. P650,000
b. P645,000
c. P500,000
d. P300,000
8. The accountant of Holy Company under liquidated provided the following data:
Assets at book value P100,000
Assets at net realizable value 75,000
Liabilities at book value:
Fully secured mortgage payable 40,000
Unsecured accounts and notes payable 45,000
Unrecorded liabilities:
Interest on bank notes 250
Administrative expenses 4,000
A trustee is appointed to liquidate the company.
The entry made by the trustee to record the assets and liabilities should include estate
equity of:
a. P14,250
b. P14,000
c. P10,250
d. P10,520
9. Using the data in No. 8, what is the estimated deficiency to unsecured creditors?
a. P35,000
b. P31,000
c. P14,250
d. P10,000
10. A review of the assets and liabilities of the Cialis Company in bankruptcy on June 30,
discloses the following:
● A mortgage payable of P350,000 is secured by land and buildings valued at P560,000
● Notes payable of P175,000 are secured by equipment valued at P140,000
● Assets other than those referred to, have an estimated value of P157,500
● Liabilities other than referred to, total P420,000, which included claims with priority of
P52,500
What is the estimated deficiency to unsecured creditors?
a. P414,000
b. P420,000
c. P87,500
d. P35,000
Good Luck………………………………….God Bless……………………….
