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Homework answers / question archive / The next three questions are based on the following information: Quitter Co
The next three questions are based on the following information: Quitter Co. is undergoing liquidation. Relevant information follows:
|
|
Carrying amount |
Realizable value |
|
Assets pledged with partially secured creditors |
80,000 |
50,000 |
|
Free assets |
220,000 |
160,000 |
|
|
Expected settlement amount |
Amount unsecured |
|
Liabilities with priority |
16,000 |
- |
|
Partially secured creditors |
75,000 |
25,000 |
|
Unsecured creditors |
155,000 |
155,000 |
12. What is the total amount available for payment of claims of unsecured creditors?
a. 210,000 c. 144,000
b. 160,000 d.0
13. What is the estimated amount of liquidating dividend per peso claim?
a 1.17 c. 0.88
b. 1.03 d. 0.80
14. What is the amount of deficiency to creditors?
a. 36,000
b. 144,000
c. 160,000
d. 180,000
15. The estimated recovery of unsecured creditors without priority is equal
a. to the realizable value of the assets pledged plus the excess amount multiplied by the estimated recovery percentage.
b. to the realizable value of the assets pledged minus the excess amount multiplied by the estimated recovery percentage.
c. to their claims multiplied by the estimated recovery percentage.
d. any of these
1.) C. This is the total assets that are available to creditors without priority and those that are not or partially secured
2.) D This is the ratio that will be used to multiply to the carrying amount of unsecured creditors and those partially secured for their share in the net free assets.
3.) A (Deficiency can be computed by subtracting the total unsecured debt with the net free assets)
4.) C (To compute the net recovery of the unsecured creditors, their claims are multiplied by the estimated recovery percentage or the liquidating dividend per peso claim for unsecured debtors.)
