Daron

CENGAGE I Problem Set 4 MINDTAP Q Search this course MAIN MENU My Home Courses FIN-650 Williamso... CENGAGE UNLIMITED Browse Catalog Partner Offers Print Options College Success Career Center RECOMMENDATIONS Career Center HOW to Find the RIGHT Job Openings Making Time to Problem-Solve SEE MORE Q Give Feedback Problem 24-01 Liquidation Southwestem Wear Inc. has the following balance sheet: Current assets Fixed assets Total assets $1,875,000 1,875,000 Accounts payable Notes payable Subordinated debentures Total debt Common equity Total liabilities and equity $375,000 750,000 750,000 A-Z The trustee's costs total $335,750, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $2.5 million is received from sale of the assets? Distribution of proceeds on liquidation: 1. Proceeds from sale of assets 2. First mortgage, paid from sale of assets 3. Fees and expenses of administration of bankruptcy 4. Wages due workers eamed within 3 months prior to filing of bankruptcy petition 5. Taxes 6. Unfunded pension liabilities 7. Available to general creditors Distribution to general creditors: Claims of General Creditors Notes payable Accounts payable Subordinated debentures Total The remaining Claim Application of 100% Distribution After Subordination Adjustment Percentage of Original Claims Received will go to the common stockholders.