Problem Walk$-$Through

Liquidation

Southwestern Wear Inc. has the following balance sheet:

Current assets

Fixed assets

$$1,875,000$ Accounts payable

$1,875,000$ Notes payable

Subordinated debentures

Total debt

Common equity

Total assets

$$3,750,000$ Total liabilities & equity

The trustee's costs total $$222,750,$ and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only

the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $$2\mathrm{.}3$ million is received from sale of the assets? Rou

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

Less:

First mortgage $($paid from the sale of fixed assets$)$

Fees and expenses of bankruptcy

Wages due to workers within $3$ months of bankruptcy

Taxes due to federal, state, and local governments

Unfunded pension liabilities

Funds available for distribution to general creditors

Distribution to general creditors:

General Creditors'

Claims

$(1)$

Amount of Claim

$(2)$

Application of $100\%$

Distribution

$(3)$

$(3)$

Distribution after

Subordination

Adjustment

$(4)$

Percentage of

Original Claim

Received

$(5)$

Accounts payable

$

$

$

$\%$

Notes payable

Subordinated

debentures

Total

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.