Southwestern Wear Inc. has the following balance sheet: Current assets Fixed assets $375,000 750,000 750,000 $1,875,000 1,875,000 $3,750,000 $1,875,000 Accounts payable 1,875,000 Notes payable Subordinated debentures Total debt Common equity Total assets The trustee's costs total $272,750, 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 $3 million is received from sale of the assets? Distribution of proceeds on liquidation 1. Proceeds from sale of a 2. First mortgage, paid from sale of assets 3. Fees and expenses of administration of bankruptcy 4. Wages due workers earned within 3 months prior to filing of bankruptcy petition 5. Taxes 6. Unfunded pension liabilities 7. Available to general creditors Distribution to general creditors: $3,750,000 Total liabilities and equity ssets