Vulnerability Ranking

Loss
Partnership
Absortion
Equity
Profit and Loss Ratio Potential
Rama 45,000 24% 187,500
Chakra 55,000 32% 171,875
Songkhla 65,000 44% 147,727

Schedule of Assumed Loss Absorption

Rama 24% Chakra 32% Songkhla 44%
Predistributin Equity 45,000 55,000 65,000
Assumed loss to absorp Songkhla
65.000 44% - 35,454 -47,273 -65,000
9,546 7,727 0

Assumed loss to absorb Chakra

7.727 4/7 - 5,795 -7,727
3,751 0

Cash Distribution Plan

Priority
Creditors Rama 24% Chakra 24%
First 65.000 1
Next 9.546 100%
Next 13.522 3/7
Remainder 24% 32%
Vulnerability
Ranking

3
2
1

Total
165,000

147,727
17,273

-13,522
3,751

Songkhla 44%

4/7
44%
Gil (40%) = 150,000
Hal (30%) = 160,000 (total 150,000)
Ian (20%) = 50,000
Joe (10%) = 55,000

Gil = 150,000/ 0,4 = $375,000 (vulnerability ranking 2)

Hal = 150,000/ 0,3 = $500,000 (vulnerability ranking 3)
Ian = 50,000/ 0,2 = $250,000 (vulnerability ranking 1)
Joe = 55,000/ 0,1 = $550,000 (vulnerability ranking 4)

Gil (40%) Hal (30%) Ian (20%) Joe (10%) Total

Preliquidat $ 150,000 $ 150,000 $ 50,000 $ 55,000 $ 405,000
Assumed lo$ -100,000 $ -75,000 $ -50,000 $-25,000 $ -250,000
Balance $ 50,000 $ 75,000 $ - $ 30,000 $ 155,000
Assumed los$ -50,000 $ -37,000 $-12,500 $ -100,000
Balance $ - $ 37,500 $ 17,500 $ 55,000
Assumed loss Hal $ -37,500 $-12,500 $ -50,000
Subtotal $ - $ 5,000 $ 5,000

Cash distribution plan

Priority Contingenc
Liabilities y Fund Gil Hal Ian Joe
First
$50,000 100%
Next $25,000 100%
Next $5,000 100%
Next $50,000 3/4 1/4
Next $100,000 4/8 3/8 1/4
Reminder 40% 10%

2. Available cash to distribute = 100.000+100.000 = 200.000

Priority Contingenc
Liabilities y Fund Gil Hal Ian Joe
Next $50,0 $ 50,000
Next $25,000 $ 25,000
Next $5,000 $ 5,000
Next $50,000 $ 37,500 $ 12,500
Next $70,000 $ 35,000 $ 26,250 $ 8,750
Distribution on to partners $ 63,750 $ 26,250
1 Patient accounts receivable $ 102,300
Patient service revenues—unrestricted $ 102,300
To record patient service charges at established rates.

Contractual adjustments $ 30,000

Patient accounts receivable $ 30,000
To record contractual adjustments.

Bad debt expense $ 2,046

Allowance for uncollectible Patient accounts receivable $ 2,046
To establish an allowance for uncollectible receivables.

2 Cash $ 54,000
Premium Revenue — unrestricted $ 54,000
To record premium revenue from capitation agreements

3 Cash $ 16,000
Other operating revenue - unrestricted $ 16,000
To record pharmacy revenue.

4 Nursing services expense $ 35,000

Other professional services $ 11,000
General services $ 10,000
Fiscal services $ 2,000
Administrative services $ 20,000
Cash $ 78,000
To record salaries and wages.

5 Cash $ 12,000
Grant revenue - restricted $ 12,000
To record receipt of restricted grant funds.

6 Supplies inventory $ 13,000

Cash (or accounts payable) $ 13,000
To record the purchase of nursing supplies.

Supplies expense $ 6,700

Supplies inventory $ 6,700
To record the use of nursing supplies.
P.18.4 Statement of affairs, claims for each class

1 POP INC STATEMENT OF AFFAIRS ON AUGUST 1, 2014 (In thousand)

Assets
Book Value Estimated Realizable Values Less Secured Creditor Liabilities Estimated Realizable Value Avaliable for Unsecured Creditors

Pledged for secured creditors

$ 775 Fixed assets-net $ 475
Less: Bond Payable $ -500
$ -
Avaliable for priority and unsecured creditors
$ 250 Cash and equivalent $ 250
$ 150 Accounts receivable $ 125
$ 200 Inventories $ 100
Total Avaliable for priority and unsecured creditors $ 475
Less: Priority liabilities $ -150
Total avaliable for unsecured creditors $ 325
Estimated deficiency $ 25
$ 1,375 $ 350

Liabilities and Stockholders Equity

Book Value Secured and Priority Claims Unsecured Nonpriority Claims

Fully secured creditors

$ 500 Bond Payable $ 500
Less: Fixed assets pleged as security $ -475 $ 25

Priority Liabilities
$ 150 Wages Payable $ 150
$ 650

Unsecured Creditors
$ 200 Account Payable $ 200
$ 125 Interest Payable $ 125

Stockholders Equity
$ 550 Common Stock
$ -150 Retained earnings
$ 1,375 $ 350

ESTIMATED PAYMENTS PER DOLLAR TO EACH CLASS OF CLAIMS

Cash Avaliable $ 950

Distribution to partially secured and priority creditors:
Bond payable (secured portion) $ 475
 Administrative expense $ 250
Wages Payable $ 150 $ 875

Avaliable to unsecured non priority creditors (A) $ 75

Unsecured non priority creditors:
Account Payable $ 200
Bond Payable (Unsecured portion) $ 25
Interest Payable $ 125
Total Unsecured non priority claims (B) $ 350

Per dollar pro rata distribution for unsecured non priority creditors:
A/B = $75/$350 = $0,21

a Payment for partially secured class

Bond Payable (Secured portion) $ 475
Bond Payable (Unsecured portion) $ 5
$ 480
b Payments for unsecured priority class
Administrative expense $ 250
Wages Payable $ 150
Total Unsecured priority class payment $ 400

c Payments for unsecured non-priority class

Account payable ($0.21x$200) $ 42
Interests payable ($0.21x$125) $ 26
Total unsecured non-priority payment $ 68

Estimated payments per dollar for unsecured creditors

Cash available $ 66,200
Distribution to partially secured and unsecured priority creditors:
Note payable and interest $ 28,000
Administrative expenses $ 4,000
Wages payable $ 12,000 $ 44,000
Available to unsecured nonpriority creditors = A $ 22,200

Note payable and interest (unsecured portion) $ 3,000

Accounts payable $ 26,400
Rent payable $ 7,600
Unsecured nonpriority claims = B $ 37,000

A/B = $22,200/$37,000 = $.60 per dollar

Expected recovery for each class of claims
Partially secured
Note payable and interest
Secured portion $ 28,000
Unsecured portion ($3,000 x $0.60) $ 1,800 $ 29,800
Unsecured priority
Administrative expenses $ 4,000
Wages payable $ 12,000 $ 16,000
Unsecured nonpriority
Accounts payable ($26,400 x $0.60) $ 15,840
Rent payable ($7,600 x $0.60) $ 4,560 $ 20,400
Total payments $ 66,200
P.18.5 Financial Reporting during bankruptcy

Dawn Corporation
Statement of Affairs at July 10, 2011
Assets

Book Value Realizable Value- Liability Offsets

Fully Secured
$ 210,000 Accounts receivable net $ 160,000
Less: notes payable $ 100,000
Partially secured
$ 250,000 Land and buildings net $ 140,000
Less: Mortgage and interest payable $ 205,000
Unsecured
$ 80,000 Cash
$ 200,000 Inventories
$ 150,000 Equipment net
$ 10,000 Intagible assets
Avaliable for priority and unsecured
Priority liabilities
Avaliable for nonpriority unsecured
Estimated deficiency
$ 900,000

Equities
Book Value Secured and Priority Claims

Priority Liabilities
$ 50,000 Account Payable $ 50,000
$ 24,000 Wages Payable $ 24,000
$ 76,000 Taxes Payable $ 76,000
$ 150,000
Fully secured
$ 100,000 Note Payable $ 100,000
Less: Accounts receivable net $ 160,000
$ -60,000
Partially secured
$ 205,000 Mortgage and interest payable $ 205,000
Less: Land and buliding net $ 140,000
$ 65,000
Unsecured
$ 350,000 Accounts payable
$ 300,000 Capital stock
 $ -205,000 Retained earnings deficit
$ 900,000

Claims by Priority Ranks Amount to be paid

Priority claims $ 11,000 $ 110,000
Administrative expense $ 50,000 $ 50,000
Accounts payable $ 24,000 $ 24,000
Wages payable $ 76,000 $ 76,000
Taxes payable
Fully secured claims
Note Payable $ 100,000 $ 100,000
Partially secured claims
Mortgage and interest payable $ 205,000 $ 140,000
$ 39,000
Unsecured
Account payable $ 350,000 $ 210,000
$ 816,000 $ 650,000

Calculation of recovery for unsecured nonpriority claims

Cash available $ 650,000

Less: Paid to priority claims $ -161,000
Less: Paid to fully secured claims $ -100,000
Less: Paid to partially secured creditors – secured portion $ -140,000

a Cash available for unsecured $ 249,000

Unsecured claims:
Partially secured ($205,000 - $140,000 secured) $ 65,000
Accounts payable — nonpriority $ 350,000
b Total unsecured claims $ 415,000
A/B = $249,000/$415,000 = $.60 recovery on the dollar
Realizable Value for Unsecured

$ 60,000

$ -

$ 80,000
$ 210,000
$ 60,000
$ -
$ 410,000
$ 150,000
$ 260,000
$ 155,000
$ 415,000

Unsecured Nonpriority Claims

$ 65,000

$ 350,000
$ 415,000

Amounts to be Written Off

$ 26,000

$ 140,000
$ 166,000
P 18.7 Instalment liquidations

1 The reorganization is eligible for fresh start accounting because the

liabilities on June 30, 2011 of $16,500 exceed the reorganization value
of $16,000 by $500. Also, the common stock of the new entity is
allocated $5,000 to prepetition creditors and $2,000 to Lowstep’s old
stockholders, so that the old stockholders have less than a 50 percent
interest in the new entity.

2 Entries to adjust Lowstep’s accounts for the reorganization plan:

Prepetition liabilities $ 12,500
Accounts payable (old) $ 800
Wages payable (old) $ 400
Note payable (new) $ 3,800
Common stock (new) $ 5,000
Gain on debt restructuring $ 2,500
To adjust prepetition liabilities to conform with the plan.

Loss on asset adjustments to fair values $ 4,000

Inventories $ 400
Land $ 1,000
Buildings — net $ 1,400
Patent $ 4,000
To adjust assets to their fair values.

Common stock (old) $ 7,000

Common stock (new) $ 2,000
Additional paid-in capital $ 5,000
To record exchange of common stock.

Gain on debt discharge $ 2,500

Additional paid-in capital $ 5,000
Reorganization value in excess of fair value $ 1,000
Loss on asset adjustments to fair values $ 4,000
Deficit $ 4,500
To eliminate deficit and record adoption of fresh start reporting.

3 Lowstep Corporation
Final Balance Sheet
as of July 8, 2011

Assets
Cash $ 6,700
Trade receivables — net $ 1,000
Inventories $ 2,000
Land $ 2,000
Buildings — net $ 1,500
Equipment — net $ 1,800
Reorganization value in excess of fair values $ 1,000
Total assets $ 16,000

Liabilities and Stockholders’ Equity

Accounts payable $ 3,000
Accounts payable (old) $ 800
Wages payable $ 1,000
Wages payable (old) $ 400
Notes payable (new) $ 3,800
Total liabilities $ 9,000
Common stock (new) $ 7,000
Total liabilities and stockholders’ equity $ 16,000
P 22.3 Statement of operations- Nongovernmental not for profit helath care organization

Hometown Memorial Hospital

Statement of Operations
For the year ended December 31, 2011

Unrestricted revenues, gains, and other support:

Net patient service revenues
($2,500,000 - $400,000 - $100,000) $ 2,000,000

Other operating revenues ($300,000 + $50,000) $ 350,000

Income from investment in affiliate $ 80,000
Investment income $ 270,000
Unrestricted contributions $ 200,000
Net assets released from restrictions for operating $ 80,000
Total operating revenues, gains, and net assets
released from restrictions for operations $ 2,980,000

Expenses and Losses:

Nursing services $ 1,000,000
Other professional services $ 500,000
General services $ 290,000
Administrative services $ 310,000
Uncollectible accounts $ 150,000
Loss on sale of fixed assets $ 50,000
Depreciation $ 200,000
Total expenses and losses $ 2,500,000

Excess of revenues, gains, and other support over

expenses and losses $ 480,000

Net assets released from restrictions for

acquisitions of fixed assets $ 97,000
Increase in unrestricted net assets $ 577,000
P 22.4 Journal Entries and Statement of activities- Nongovernmental not for profit organization

Journal Entries
Accounts receivable $ 20,000,000
Unrestricted revenues — tuition and fees $ 2,000,000
To record tuition and fees.

Tuition reduction: unrestricted—student aid $ 120,000

Accounts receivable $ 120,000
To record tuition reductions.

Cash $ 1,100,000
Unrestricted revenues — state appropriation $ 800,000
Unrestricted revenues — local appropriation $ 300,000
To record governmental appropriations.

Cash $ 500,000
Revenue – auxiliary operations $ 500,000
To record auxiliary revenues.

Expenses – auxiliary operations $ 480,000

Cash $ 480,000
To record auxiliary expenses.

Cash $ 90,000
Unrestricted revenues—contributions $ 20,000
Temporarily restricted revenues— contributions $ 70,000
To record contributions received.

Cash $ 380,000
Unrestricted revenues—gifts and grants $ 80,000
Temporarily restricted revenues—Gifts and grants $ 300,000
To record gifts and grants received.

Expenses – educational and general - instruction $ 2,100,000

Expenses – educational and general - research $ 100,000
Expenses – educational and general – student services $ 120,000
Expenses – educational and general – operation of plant $ 180,000
Expenses – educational and general – student aid $ 200,000
Cash (or payables) $ 2,700,000
To record educational and general expenses.

Temporarily restricted net assets — reclassifications out $ 300,000

Unrestricted net assets — reclassifications in $ 300,000
To reclassify temporarily restricted assets (assumes all
scholarships and research were from temporarily
restricted funds).
P 22.5 Statement of activities- Nongovernmental not for profit organization

Community Society
Statement of Activities
For the Year Ended December 31, 2011

Changes in Unrestricted Net Assets

Revenues and gains
Contributions $ 3,000,000
Membership dues $ 400,000
Investment income $ 83,000
Total revenue and gains $ 3,483,000
Net assets released from restrictions:
For research $ 500,000
For fixed assets $ 3,789,000 $ 4,289,000
Increase in unrestricted net assets $ 7,772,000

Expenses:
Program Services:
Research $ 2,300,000
Education $ 300,000
Total Program Services $ 2,600,000

Supporting Services:
Management and general $ 117,000
Fund raising $ 223,000
Total Supporting Services $ 340,000
Total expenses $ 2,940,000
Net increase in unrestricted net assets $ 4,832,000

Changes in Temporarily Restricted Net Assets

Contributions ($438,000 + $425,000 - $16,000) $ 847,000
Investment income $ 22,500
Gain on sale of investments $ 5,000
Net assets released from restrictions $ -4,289,000
Decrease in temporarily restricted net assets $ -3,414,500

Changes in Permanently Restricted Net Assets

Contributions $ 37,000
Increase in permanently restricted net assets $ 37,000

Increase in net assets $ 1,454,500

Net assets, beginning $ 5,475,000
Net assets, ending $ 6,929,500
P 22.8 Journal Entries- Nongovermental not for profit health care organization

1 Patient accounts receivable $ 102,300

Patient service revenues—unrestricted $ 102,300
To record patient service charges at
established rates.

Contractual adjustments $ 30,000

Patient accounts receivable $ 30,000
To record contractual adjustments.

Bad debt expense $ 2,046

Allowance for uncollectible Patient
accounts receivable $ 2,046
To establish an allowance for
uncollectible receivables.

2 Cash $ 54,000
Premium Revenue — unrestricted $ 54,000
To record premium revenue from capitation
agreements

3 Cash $ 16,000
Other operating revenue - unrestricted $ 16,000
To record pharmacy revenue.

4 Nursing services expense $ 35,000

Other professional services $ 11,000
General services $ 10,000
Fiscal services $ 2,000
Administrative services $ 20,000
Cash $ 78,000
To record salaries and wages.

5 Cash $ 12,000
Grant revenue - restricted $ 12,000
To record receipt of restricted grant funds.

6 Supplies inventory $ 13,000

Cash (or accounts payable) $ 13,000
To record the purchase of nursing supplies.

Supplies expense $ 6,700

Supplies inventory $ 6,700
To record the use of nursing supplies.