Question
Southwestern Wear Inc. has the following balance sheet: Current assets $1,875,000 Accounts payable $ 375,000 Fixed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total
Southwestern Wear Inc. has the following balance sheet: 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 The trustee's costs total $302,000, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. 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 $2.4 million is received from sale of the assets? Round 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: 1. First mortgage (paid from the sale of fixed assets) 2. Fees and expenses of bankruptcy 3. Wages due to workers within 3 months of bankruptcy 4. Taxes due to federal, state, and local governments 5. 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) 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.
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