uthwestern Wear Inc. has the following balance sheet: $1,875,000 Accounts payable $ 375,000 rrent assets ed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total debt $1,875,000 Common equity 1,875,000 $3,750,000 $3,750,000 Total liabilities & equity cal assets e trustee's costs total $310,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded i uidates, how much will each class of investors receive if a total of $2.7 million is received from sale of the asse mber. If your answer is zero, enter "0". Enter your answers as positive values. stribution of proceeds on liquidation: oceeds from the sale of assets ss: First mortgage (paid from the sale of fixed assets)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Liquidation
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 & equity
$3,750,000
The trustee's costs total $310,250, 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
$2.7 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
24
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
$
Distribution to general creditors:
Distribution after
Percentage of
General Creditors'
Application of 100%
Subordination
Original Claim
Claims
Amount of Claim
Distribution
Adjustment
Received
(1)
(2)
(3)
(4)
(5)
Accounts payable
24
2$
%
Notes payable
Subordinated
debentures
Total
$
$
$4
Round your answer for monetary value to the nearest dollar and for percentage value to two decimal places.
The remaining $
will go to the common stockholders. They will receive only
% of the amount of equity on the balance sheet.
Transcribed Image Text:Liquidation 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 & equity $3,750,000 The trustee's costs total $310,250, 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 $2.7 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 24 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 $ Distribution to general creditors: Distribution after Percentage of General Creditors' Application of 100% Subordination Original Claim Claims Amount of Claim Distribution Adjustment Received (1) (2) (3) (4) (5) Accounts payable 24 2$ % Notes payable Subordinated debentures Total $ $ $4 Round your answer for monetary value to the nearest dollar and for percentage value to two decimal places. The remaining $ will go to the common stockholders. They will receive only % of the amount of equity on the balance sheet.
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