View the step-by-step solution to:




  P 5,000

Note payable (short-term)

P 97,000




Accounts payable


Accounts receivable


Accrued expenses




Note payable (long-term)


Prepaid expenses


Share capital




Retained earnings (deficit)










Intangible assets





·        The note payable (short-term) is secured by the inventory and the note payable (long-term) is secured by the land and building.

·        Marketable securities have a fair value of P35,000 and dividends of P1,000 are due from this investment.

·        Only P15,000 can be collected from the accounts receivable.

·        Inventory can only be sold at P48,500.

·        Prepaid expenses include a refund of P1,000.

·        The intangible assets have no resale value.

·        Fair value of land and building P238,000 and fair value of equipment P58,000.

·        Administrative expenses of P31,500 are estimated as liquidation expenses.

·        Salaries of P12,000 and payroll taxes of P3,000 are accrued.

·        Interest on the long-term note payable of P8,000 has not been accrued.





1.    How much is the estimated deficiency?

2.    What is the estimated recovery percentage?

3.    What is the estimated recovery for partially secured creditors?

4.    How much is the estimated recovery for unsecured creditors without priority?

5.    What is the amount of net free assets? 

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes