Problem #1 (from text)

Southwestern Wear Inc. has the following balance sheet. The trustees costs total $281,250 and the firm has no accrued taxes or wages. 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 of $2.5 million is received from sale of the assets?

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