Excel Online Structured Activity: Liquidation

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 file 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 mortgage bondholders, brought in $420,000, while the current assets were sold for another $340,000. Thus, the total proceeds from the liquidation sale were $760,000. The trustee's costs amounted to $30,000; 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.

Proceeds from sale of fixed assets $420,000 Proceeds from sale of current assets $340,000 Trustee's costs $30,000 Any single worker due more than $2,000 in wages? No Any unfunded pension plan liabilities? No Balance Sheet: Current assets$400,000 Accounts payable$50,000 Accrued taxes40,000 Accrued wages30,000 Notes payable180,000 Total current liabilities$300,000 Net fixed assets600,000 First-mortgage bonds*300,000 Second-mortgage bonds*200,000 Debentures200,000 Subordinated debentures **100,000 Common stock50,000 Retained earnings-150,000 Total assets$1,000,000 Total claims$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 $420,000 Less: First mortgage (paid from sale of fixed assets) #N/A Second mortgage (paid from sale of fixed assets) #N/A Total funds distributed to mortgage bondholders $0 Funds available from fixed assets proceeds after distribution to bondholders $420,000 Distribution to Priority Claimants: Proceeds from sale of assets after distribution to mortgage bondholders #N/A Less: Fees and expenses of bankruptcy #N/A Wages due to workers within 3 months of bankruptcy #N/A Taxes due to federal, state, and local governments #N/A Total funds distributed to priority claimants #N/A Funds available for distribution to general creditors #N/A Pro Rata Distribution Before Subordination Adjustment #N/A Distribution to General Creditors: General Creditors' ClaimsAmount of ClaimPro Rata Distribution Before Subordination AdjustmentDistribution after Subordination AdjustmentTotal Amount ReceivedPercentage of Original Claim ReceivedUnsatisfied portion of first mortgage $0 Accounts payable50,000 00 Notes payable (to banks)180,000 0 Second mortgage 0 Debentures200,000 00 Subordinated debentures100,000 0 Total claims$530,000 $0 Formulas General Creditors' ClaimsAmount of ClaimPro Rata Distribution Before Subordination AdjustmentDistribution after Subordination AdjustmentTotal Amount ReceivedPercentage of Original Claim ReceivedUnsatisfied portion of first mortgage#N/A#N/A #N/A#N/AAccounts payable #N/A #N/ANotes payable (to banks) #N/A#N/A #N/ASecond mortgage#N/A#N/A #N/A#N/ADebentures #N/A #N/ASubordinated debentures #N/A#N/A #N/ATotal claims #N/A

1. How much will McDaniel's shareholders receive from the liquidation? If your answer is zero, enter "0". Round your answer to the nearest dollar.

$ fill in the blank 2

1. How much will the mortgage bondholders receive? If your answer is zero, enter "0". Round your answer to the nearest dollar.

$ fill in the blank 3

1. How much will other priority claimants receive from the liquidation? Do not round intermediate calculations. Round your answers to the nearest dollar.

ClaimantAmountTrustee's expenses$ fill in the blank 4Workers' wages due$ fill in the blank 5Governments' taxes due$ fill in the blank 6Total$ fill in the blank 7

2. 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.

AccountAmount ReceivedAccounts payable$ fill in the blank 8Notes payable$ fill in the blank 9Second mortgage bonds$ fill in the blank 10Debentures$ fill in the blank 11Subordinated debentures$ fill in the blank 12Total$ fill in the blank 13

1. What is the effect of adjusting for subordination? If your answer is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest dollar.

AccountAmount Received after subordination adjustmentNotes payable$ fill in the blank 14Subordinated debentures$ fill in the blank 15