Question: The answer for this question is below, but I cannot figure out how they arrived at this. Southwestern Wear Inc. has the following balance sheet:

The answer for this question is below, but I cannot figure out how they arrived at this. Southwestern Wear Inc. has the following balance sheet: Current assets $1,875,000 Accounts payable $375,000 Fixed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total Debt $1,875,000 Common equity 1,875,000 Total assets $3,750,000 Total liabilities and equity $3,750,000 The trustees costs total $281,250, and the firm has no accrued taxes on wages. 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 the sale of the assets? Answer: AP=$375,000; NP=$750,000; SD=$750,000; Stockholders=$343,750

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