1. A Chapter 7 bankruptcy is a(n)
2. Where should a company undergoing reorganization report the gains and
losses resulting from the reorganization?
3. Lawyer’s fees incurred during a reorganization are accounted for as:
4. On its balance sheet, a company undergoing reorganization should
5. How should the
fresh start reorganization value
normally be determined?
6. How should liabilities (except for deferred income taxes) be reported by a
company using
fresh start accounting
?
7. Which one of the following is a requirement that must be met before an
involuntary bankruptcy petition
can be filed when there are at least 12 unsecured
creditors?
8. Which one of the following
unsecured liabilities
has the highest priority
when an insolvent company is about to be liquidated?
9. In a
statement of financial affairs
, assets are classified
10. The
statement of financial affairs
should be prepared
11. On a
statement of financial affairs
, a company’s assets should be valued
at
12. On a
statement of financial affairs
, a company’s liabilities should be
valued at
13. What are
free assets
?
14. On a
statement of financial affairs
, a specific liability may be classified as
15. Which of the following is
not
one of the more common reorganization plan
elements?
16. What is normally required before a reorganization plan can be
implemented?
17. During a reorganization, how should
interest expense
be reported on the
financial statements?
18. During a reorganization, cash reserves tend to grow. How should interest
earned on these reserves be reported on the financial statements?
19. Sparkman Co. filed a bankruptcy petition and liquidated its noncash
assets. Sparkman was paying forty cents on the dollar for unsecured claims.
Bailey Co. held a mortgage of $150,000 on land that was sold for $110,000. The
total amount of payment that Bailey should have received is calculated to be
20. Quincy Corp., about to be liquidated, has the following amounts for its
assets and liabilities:
The mortgage is secured by the land and building, and the note payable is
secured by the equipment. Quincy expects that the expenses of administering
the liquidation will total $40,000.
How much should Quincy expect to pay on the accounts payable?
21. Quincy Corp., about to be liquidated, has the following amounts for its
assets and liabilities:
The mortgage is secured by the land and building, and the note payable is
secured by the equipment. Quincy expects that the expenses of administering
the liquidation will total $40,000.
How much should the mortgage holder expect to collect from the liquidation?
22. Gongman Corp. owned the following assets when it came out of a Chapter
11 bankruptcy:
Gongman Corp. had a fresh start reorganization value of $1,000,000. What
amount of goodwill should have been recognized in recording the
reorganization?
23. Mandich Co. had the following amounts for its assets, liabilities, and
stockholders’ equity accounts just before filing a bankruptcy petition and
requesting liquidation:
Of the salaries payable, $30,000 was owed to an officer of the company. The
remaining amount was owed to salaried employees who had not been paid within
the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed
$15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed
$2,500. The maximum owed for any one employee’s claims for contributions to
benefit plans was $800. Estimated expense for administering the liquidation
amounted to $40,000.
What was the total amount of unsecured liabilities with priority?
24. Mandich Co. had the following amounts for its assets, liabilities, and
stockholders’ equity accounts just before filing a bankruptcy petition and
requesting liquidation:
Of the salaries payable, $30,000 was owed to an officer of the company. The
remaining amount was owed to salaried employees who had not been paid within
the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed
$15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed
$2,500. The maximum owed for any one employee’s claims for contributions to
benefit plans was $800. Estimated expense for administering the liquidation
amounted to $40,000.
On a
statement of financial affairs
, what amount would have been shown as
assets available to pay liabilities with priority and unsecured creditors?
