Question
The following balance sheet represents Boles Electronics Corporation's position at the time it filed for bankruptcy (in thousands of dollars): Cash $10 Accounts payable $1,600
The following balance sheet represents Boles Electronics Corporation's position at the time it filed for bankruptcy (in thousands of dollars):
Cash | $10 | Accounts payable | $1,600 |
Receivables | 100 | Notes payable | 500 |
Inventories | 890 | Wages payable | 150 |
Taxes payable | 50 | ||
Total current assets | $1,000 | Total current liabilities | $2,300 |
Net plant | 4,000 | Mortgage bods | 2,000 |
Net equipment | 5,000 | Subordinated debentures | 2,500 |
Preferred stock | 1,500 | ||
Common stock | 1,700 | ||
Total assets | $10,000 | Total claims | $10,000 |
The mortgage bonds are secured by the plant but not by the equipment. The subordinated debentrues are subordinated to notes payable. The firm was unable to reorganize under Chapter 11; therefore, it was liquidated under Chapter 7. The trustee, whose legal and administrative fees amounted to $200,000, sold off the assets and received the following proceeds (in thousands of dollars):
Asset | Proceeds |
Plant | $1,600 |
Equipment | 1,300 |
Receivables | 50 |
Inventories | 240 |
Total | $3,190 |
In addition, the firm had $10,000 in cash abailable for distribution. No single wage earner had more than $10,000 in claims, and there were no unfunded pension plan liabilities.
QUESTION:
What is the total amount available for distribution to all claimants? What is the total of creditor and trustee claims? Will the preferred and common stockholders receive any distributions?
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