At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining...

  

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At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the balance sheet provided in the Microsoft Excel Online fle below. The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation. Sale of the fixed assets, which were pledged as collateral to the martgage bondholders, brought in $440,000, while the current assets were sold for another $230,000. Thus, the total proceeds from the liquidation sale were $670,000. The trustee's costs amounted to $35,000; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. How much will McDaniel's shareholders receive from the liquidation? If your answer is zero, enter "0", Round your answer to the nearest dollar. b. How much will the mortgage bondholders receive? If your answer is zero, enter "0". Round your answer to the nearest dollar. C. How much will other priority ciaimants receive from the liquidation? Do not round intermediate calculations. Round your answers to the nearest dollar. d. How much will the remaining general creditors receive from the distribution before subordination adjustment? If your answer is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest dollar. What is the effect of adjusting for subordination? If your answer is zerk enter "0". Do not round intermediate calculations. Round your answers to the nearest dollar. Dessiued Liquidation Proceeds from sale of fixed assets $440,000 $230,000 $35,000 No Proceeds from sale of current assets Trustee's costs Any single worker due more than $2,000 in wages? Any unfunded pension plan liabilities? No Balance Sheet: Current assets Accounts payable Accrued taxes Accrued wages Notes payable Total current liabilities S400,000 $50,000 40.000 30,000 180.000 $300,000 300,000 First-mortgage bonds Second-morigage bonds Debentures Net fixed assets 600,000 200,000 200,000 Subordinated debentures ** Common stock Retained earnings Total claims 100,000 50,000 -150,000 $1.000,000 Total assels $1.000.000 Notes: * All fixed assets are pledged as collateral to the mortgage bonds. **Subordinated to notes payable only. Distribution to Common Shareholders: Formulas Amount distributed to common shareholders #N/A Distribution to Mortgage Bondholders: Proceeds from sale of fixed assets $440,000 Less: First mortgage (paid from sale of fixed assets) Second mortgage (paid from sale of fixed assets) Total funds distributed to mortgage bondholders #N/A #N/A $0 Funds available from fixed assets proceeds after distribution to bondholders $440,000 Distribution to Priority Claimants: Proceeds from sale of assets after distribution to mortgage bondholders #N/A Less: Fees and expenses of bankruptcy Wages due to workers within 3 months of bankruptcy Taxes due to federal, state, and local governments Total funds distributed to priority claimants #N/A #N/A #N/A #N/A Funds available for distribution to general creditors #N/A Pro Rata Distribution Before Subordination Adjustment #N/A Distribution to General Creditors: Percentage of Original Claim Pro Rata Distribution Before Subordination Adjustment Total Amount Received General Creditors' Claims Amount of Claim Distribution after Subordination Adjustment Received Unsatisfied portion of first mortgage Accounts payable Notes payable (to banks) $0 50,000 180,000 Second mortgage Debentures 200,000 Subordinated debentures 100,000 Total claims $530,000 $0 Formulas Percentage of Original Claim Pro Rata Distribution Before Total Amount General Creditors' Claims Amount of Claim Subordination Adjustment Distribution after Subordination Adjustment Received Received #N/A Unsatisfied portion of first mortgage Accounts payable Notes payable (to banks) Second mortgage #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Debentures #N/A #N/A Subordinated debentures #N/A #N/A #N/A Total claims #N/A At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the balance sheet provided in the Microsoft Excel Online fle below. The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation. Sale of the fixed assets, which were pledged as collateral to the martgage bondholders, brought in $440,000, while the current assets were sold for another $230,000. Thus, the total proceeds from the liquidation sale were $670,000. The trustee's costs amounted to $35,000; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. How much will McDaniel's shareholders receive from the liquidation? If your answer is zero, enter "0", Round your answer to the nearest dollar. b. How much will the mortgage bondholders receive? If your answer is zero, enter "0". Round your answer to the nearest dollar. C. How much will other priority ciaimants receive from the liquidation? Do not round intermediate calculations. Round your answers to the nearest dollar. d. How much will the remaining general creditors receive from the distribution before subordination adjustment? If your answer is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest dollar. What is the effect of adjusting for subordination? If your answer is zerk enter "0". Do not round intermediate calculations. Round your answers to the nearest dollar. Dessiued Liquidation Proceeds from sale of fixed assets $440,000 $230,000 $35,000 No Proceeds from sale of current assets Trustee's costs Any single worker due more than $2,000 in wages? Any unfunded pension plan liabilities? No Balance Sheet: Current assets Accounts payable Accrued taxes Accrued wages Notes payable Total current liabilities S400,000 $50,000 40.000 30,000 180.000 $300,000 300,000 First-mortgage bonds Second-morigage bonds Debentures Net fixed assets 600,000 200,000 200,000 Subordinated debentures ** Common stock Retained earnings Total claims 100,000 50,000 -150,000 $1.000,000 Total assels $1.000.000 Notes: * All fixed assets are pledged as collateral to the mortgage bonds. **Subordinated to notes payable only. Distribution to Common Shareholders: Formulas Amount distributed to common shareholders #N/A Distribution to Mortgage Bondholders: Proceeds from sale of fixed assets $440,000 Less: First mortgage (paid from sale of fixed assets) Second mortgage (paid from sale of fixed assets) Total funds distributed to mortgage bondholders #N/A #N/A $0 Funds available from fixed assets proceeds after distribution to bondholders $440,000 Distribution to Priority Claimants: Proceeds from sale of assets after distribution to mortgage bondholders #N/A Less: Fees and expenses of bankruptcy Wages due to workers within 3 months of bankruptcy Taxes due to federal, state, and local governments Total funds distributed to priority claimants #N/A #N/A #N/A #N/A Funds available for distribution to general creditors #N/A Pro Rata Distribution Before Subordination Adjustment #N/A Distribution to General Creditors: Percentage of Original Claim Pro Rata Distribution Before Subordination Adjustment Total Amount Received General Creditors' Claims Amount of Claim Distribution after Subordination Adjustment Received Unsatisfied portion of first mortgage Accounts payable Notes payable (to banks) $0 50,000 180,000 Second mortgage Debentures 200,000 Subordinated debentures 100,000 Total claims $530,000 $0 Formulas Percentage of Original Claim Pro Rata Distribution Before Total Amount General Creditors' Claims Amount of Claim Subordination Adjustment Distribution after Subordination Adjustment Received Received #N/A Unsatisfied portion of first mortgage Accounts payable Notes payable (to banks) Second mortgage #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Debentures #N/A #N/A Subordinated debentures #N/A #N/A #N/A Total claims #N/A

Answer rating: 100% (QA)

Total Amount Received on Liquidation 780000 Total Creditors Claims Current Liabilities Amount Due on First Mortgage Amount Due on Second Mortgage Clai... View the full answer