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PROBLEM 1: How Should The 100,000 Be Distributed To The Following Creditors

The document discusses how to distribute $100,000 to creditors including unsecured creditors with priority, partially secured creditors, and unsecured creditors without priority. It also contains a second problem calculating estimated amounts to be paid to fully secured, unsecured with priority, partially secured, and unsecured without priority creditors given total assets and liabilities.

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Mitch Tokong Minglana
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60 views

PROBLEM 1: How Should The 100,000 Be Distributed To The Following Creditors

The document discusses how to distribute $100,000 to creditors including unsecured creditors with priority, partially secured creditors, and unsecured creditors without priority. It also contains a second problem calculating estimated amounts to be paid to fully secured, unsecured with priority, partially secured, and unsecured without priority creditors given total assets and liabilities.

Uploaded by

Mitch Tokong Minglana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MITCH T.

MINGLANA
BSA 301

PROBLEM 1: How should the 100,000 be distributed to the following creditors:

Unsecured Creditors with Priority


Partially Secured Creditors
Unsecured Creditors without Priority

ANSWER AND SOLUTION:

Cash Available P100, 000


Less: Mortgage payable secured by property 50, 000
Amount available to unsecured creditors P50, 000
Less: unsecured creditors with priority
Administrative expenses P8, 000
Salaries payable 2, 000 10, 000
Net free assets or amount available to
Unsecured creditors without priority P40, 000

Expected recovery percentage of unsecured creditors


P40, 000/ (P80, 000- P50, 000) +P 50, 000 P .50

Therefore, the cash is distributed as follows:

UNSECURED CREDITORS WITH PRIORITY P10, 000

PARTIALLY SECURED CREDITORS:

Property at selling price P50, 000


Add: Portion of free assets used
To pay the unsecured amount
(P80, 000- P50, 000) x50% 15, 000 65,000

UNSECURED CREDITORS WITHOUT PRIORITY


P50, 000x .50 25, 000
TOTAL P100, 000
PROBLEM 2: Compute the estimated amount to be paid to:

ANSWER AND SOLUTION

Assets pledged to fully secured liabilities P100, 000


Less: fully secured liabilities 80, 000
Excess of assets pledged to fully secured liabilities
(Free assets of fully secured liabilities) P20, 000
Add: free assets 120,000
Total free assets to unsecured liabilities P140, 000
Less: Unsecured liabilities with priority 60, 000
Net free assets P80, 000

Unsecured liabilities:
Partially secured liabilities P50, 000
Less: assets pledged to partially
Secured liabilities 40,000 P10, 000
Unsecured liabilities without priority 90, 000
Total unsecured liabilities P100, 000

EXPECTED RECOVERY PERCENTAGE OF UNSECURED LIABILITIES:

Net free assets_________ = P 80,000 = 80%


Total unsecured liabilities P100, 000

Therefore, the estimated amount to be paid creditors are:

FULLY SECURED LIABILITIES P 80,000 100%(80/80)

UNSECURED LIABILITIES 60, 000 100%(60/60)

PARTIALLY SECURED LIABILITIES:


Asset P40, 000
Unsecured creditors
(P50, 000-P 40, 000) x80% 8, 000 48,000 96% (48/50)

UNSECURED LIABILITIES W/OUT PRIORITY:


(P90, 000X 80%) 72,000 80% (72/80)
TOTAL P260,000

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