18.14 Voluntary settlement For a firm with outstanding debt of $125,000, classif

Question

18.14 Voluntary settlement For a firm with outstanding debt of $125,000, classify each of the following voluntary settlements as a compensation, or a combination of the two.

a) Paying a group of creditors in full in four periodic installments and paying the remaining creditors in full immediately.

b) Paying a group of creditors 90 cents on the dollor immediately and paying the remaining creditors 80 cents on the dollar in two periodic installments.

c) Paying all creditors 15 cents on the dollar.

d) Paying all creditors in full in 180 days.

Explanation / Answer

a. voluntary settlements Extension: Paying a group in full in 4 installments

voluntary settlements composition: paying the remaining creditors in full immediately.

b. voluntary settlements composition: Paying a group of creditors 90 cents on the dollor immediately

voluntary settlements Extension:Paying the remaining creditors 80 cents on the dollar in two periodic installments

c. voluntary settlements composition: Paying all creditors 15 cents on the dollar

d. voluntary settlements Extension:Paying all creditors in full in 180 days.

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