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Excel Online Structured Activity: Liquidation At the time it defaulted on its interest payments and led for bankruptcy, the McDaniel Mining Company had the balance sheet provided in the Microsoft Excel Online le below. The oourt, after trying unsuccessfully to reorganize the rm, decided that the only recourse was liquidation. Sale of the xed assets, which were pledged as collateral to the mortgage bondholders, brought in $440,000, while the current assets were sold for another $230,000. Thus, the total proceeds from the liquidation sale were $670,000. The trustee's costs amounted to $35,000; 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 le below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. How much will McDaniel's shareholders receive from the liquidation? If your answer is zero, enter "0". Round your answer to the nearest dollar. $ 09 b. How much will the mortgage bondholders receive? If your answer is zero, enter "0". Round your answer to the nearest dollar. $ 500000 0 c. How much will other priority claimants receive from the liquidation? Do not round intermediate calculations. Round your answers to the nearest dollar. claimant Amount Trustee's expenses $ 35000 9 Workers' wages due $ 30000 9 Governments' taxes due $ 40000 9 Total $ 105000 6'9 d. 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. Account Amount Received Accounts payable $ 50000 0 Notes payable 3; 180000 0 Second mortgage bonds 35 200000 0 Debentures $ 200000 0 c. How much will other priority claimants receive from the liquidation? Do not round intermediate calculations. Round your answers to the nearest dollar. claimant Amount Trustee's expenses '5 35000 9 Workers' wages due '5 30000 @ Governments' taxes due $ 40000 9 Total $ 105000 Q d. 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. Account Amount Received Accounts payable $ 50000 0 Notes payable $ 180000 0 Second mortgage bonds 15 200000 0 Debentures $ 200000 0 rdinated ::::ntures $ 200000 0 Total $ 830000 0 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. Amount Received after Account . . subordination adjustment Notes payable $ 0 0 Subordinated $ 0 debentures @ Proceeds from sale of fixed assets $440,000 Proceeds from sale of current assets $230,000 Trustee's costs $35,000 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 taxes 40,000 Accrued wages 30,000 Notes payable 180,000 Total current liabilities $300,000 Net fixed assets 600,000 First-mortgage bonds* 300,000 Second-mortgage bonds* 200,000 Debentures 200,000 Subordinated debentures * 100,000 Common stock 50,000 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 $440,000First 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 Funds available from fixed assets proceeds after distribution to bondholders $440,000 Distribution to Priority Claimants: Proceeds from sale of assets after distribution to mortgage bondholders #N/A .ess: 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: e of Pro Rata Distribution Original Before Subordination Total Amount Claim General Creditors' Claims Amount of Claim Adjustment Distribution after Subordination Adjustment Received Received Unsatisfied portion of first mortgage $0 Accounts payable 50,000 0 Notes payable (to banks) 180,000 Second mortgage Debentures 200,000 O O Subordinated debentures 100,000 oo oo Total claims $530.000 $0Pro Rata Distribution Original Before Subordination Total Amount Claim General Creditors' Claims Amount of Claim Adjustment Distribution after Subordination Adjustment Received Received nsatisfied portion of first mortgage $0 Accounts payable 50,000 0 Notes payable (to banks) 180,000 Second mortgage 0 Debentures 200,000 0 Subordinated debentures 100,000 o O Total claims $530,000 $0 Formulas e of Pro Rata Distribution Original Before Subordination Total Amount Claim General Creditors' Claims Amount of Claim Adjustment Distribution after Subordination Adjustment Received Received Unsatisfied portion of first mortgage #N/A #N/A #N/A #N/A Accounts payable #N/A #N/A Notes payable (to banks) #N/A #N/A #N/A Second mortgage #N/A #N/A #N/A #N/A Debentures #N/A #N/A Subordinated debentures #N/A #N/A #N/A Total claims #N/A
