Assume that Alvin Company acquires $5,000 cash from creditors and $2,500 cash from investors.

Required

a. Explain the primary differences between investors and creditors.

b. If Alvin Company has net income of $1,500 and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?

c. If Alvin Company has a net loss of $1,500 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?

d. If Alvin Company has a net loss of $5,500 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?