Liquidation Southwestern Wear Inc. has the following balance sheet: $1,875,000 Accounts payable 1,875,000 Notes payable Current assets Fixed assets Subordinated debentures Total debt Common equity Total assets $3,750,000 Total liabilities & equity The trustee's costs total $346,000, 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 goe bankrupt and liquidates, how much will each class of investors receive if a total of $2.3 million is received from sale of the assets? Round your answers for monetary values to the nearest dollar and for percentage values to the nearest whole number. If your answer is zero, enter "0". Enter your answers as positive values. Distribution of proceeds on liquidation: Proceeds from the sale of assets Less: 1. First mortgage (paid from the sale of fixed assets) 2. Fees and expenses of bankruptcy 3. Wages due to workers within 3 months of bankruptcy 4. Taxes due to federal, state, and local governments 5. Unfunded pension liabilities Funds available for distribution to general creditors $ $ 375,000 750,000 750,000 $ $1,875,000 1,875,000 $3,750,000
Liquidation Southwestern Wear Inc. has the following balance sheet: $1,875,000 Accounts payable 1,875,000 Notes payable Current assets Fixed assets Subordinated debentures Total debt Common equity Total assets $3,750,000 Total liabilities & equity The trustee's costs total $346,000, 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 goe bankrupt and liquidates, how much will each class of investors receive if a total of $2.3 million is received from sale of the assets? Round your answers for monetary values to the nearest dollar and for percentage values to the nearest whole number. If your answer is zero, enter "0". Enter your answers as positive values. Distribution of proceeds on liquidation: Proceeds from the sale of assets Less: 1. First mortgage (paid from the sale of fixed assets) 2. Fees and expenses of bankruptcy 3. Wages due to workers within 3 months of bankruptcy 4. Taxes due to federal, state, and local governments 5. Unfunded pension liabilities Funds available for distribution to general creditors $ $ 375,000 750,000 750,000 $ $1,875,000 1,875,000 $3,750,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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