Reference no: EM132869193

A Company, which is undergoing liquidation, has the following condensed balance sheet as of December 31, 2020:

Cash 1,584,000

Receivables, net 3,696,000

Inventory 924,000

Prepaid expenses 252,000

Equipment, net 2,800,000

Furniture 800,000

Goodwill 240,000

Total assets 10,296,000

Salaries payable 480,000

Accounts payable 660,000

Bonds payable 680,000

Bank loan payable 5,200,000

Notes payable 2,376,000

Ordinary shares 960,000

Deficit (60,000)

Total liabilities and SHE 10,296,000

Additional information:

I. The bonds payable above was secured by the furniture with realizable amount of 720,000 while the entire receivable with realizable amount of 3,600,000 has been the collateral for bank loan payable.

II. Notes payable was secured by equipment with realizable amount of 2,376,000.

III. Inventory could be sold for 804,000.

IV. Liquidation expenses incurred by the trustee amounted to 80,000 and unrecorded tax payable amounted to 60,000.

Problem 1. How much is the net free assets?

. 2,388,000 B.1,768,000 C.1,808,000 D.2,428,000

Problem 2. How much is the estimated deficiency to unsecured creditors?

A.(452,000) B.(492,000) C.(425,000) D.0

Problem 3. What is the estimated net gain/(loss) on realization of assets?

A.(1,212,000) B.(720,000) C.(960,000) D.972,000

Problem 4. How much is the estimated payment to partially secured creditors?

Problem 5. What is the estimated recovery percentage for unsecured liabilities without priority?

Problem 6. What is the estimated recovery percentage for partially secured liabilities?