Liquidation

At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the following balance sheet shown below (in thousands of dollars). The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $390,000, while the current assets were sold for another $280,000. Thus, the total proceeds from the liquidation sale were $670,000. The trustee's costs amounted to $65,000; no single worker was due more than the maximum allowable wages per worker; and there were no unfunded pension plan liabilities.

Current assets $ 400 Account payable $ 50

Net fixed assets 600 Accrued taxes 40

Accrued wages 30

Notes payable 180

Total current liabilities $ 300

First-mortgage bonds* 300

Second-mortgage bonds* 200

Debentures 200

Subordinated debentures** 100

Common stock 50

Retained earnings -150

Total assets $1,000 Total claims $1,000

Notes: *All fixed assets are pledged as collateral to the mortgage bonds. **Subordinated to notes payable only.

How much will McDaniel's shareholders receive from the liquidation? Round your answer to the nearest dollar.

$

How much will the mortgage bondholders receive? Round your answer to the nearest dollar.

$

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

Claimant Amount

Trustee's expenses $

Workers' wages due $

Governments' taxes due $

Total $

How much will the remaining general creditors receive from the distribution before subordination adjustment? Round your answers to the nearest dollar. Do not round intermediate calculations.

Account Amount Received

Accounts payable $

Notes payable $

Second mortgage bonds $

Debentures $

Subordinated debentures $

Total $

What is the effect of adjusting for subordination? Round your answers to the nearest dollar. Do not round intermediate calculations.

Account Amount Received after subordination adjustment

Notes payable $

Subordinated debentures $