Question
The following balance sheet represents Edwards Clothing Corporations position at the time it filed for bankruptcy. Cash $ 10,000 Accounts payable $ 1,600,000 Receivables 100,000
The following balance sheet represents Edwards Clothing Corporations position at the time it filed for bankruptcy.
Cash | $ 10,000 | Accounts payable | $ 1,600,000 |
Receivables | 100,000 | Notes payable | 500,000 |
Inventories | 890,000 | Accrued wages | 150,000 |
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| Accrued taxes | 50,000 |
Total current assets | 1000,000 | Total current liability | $ 2,300,000 |
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Net plant | $ 4,000,000 | Mortgage bonds | 2,000,000 |
Net equipment | 5,000,000 | Subordinated debentures | 2,500,000 |
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| Preferred stock | 1,500,000 |
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| Common stock | 1,700,000 |
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Total assets | $ 10,000,000 | Total Claims | $ 10,000,000 |
The mortgage bonds are secured by the plant, but not by the equipment. The subordinated debentures 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.
Asset Proceeds
Plant $1,600,000
Equipment $1,300,000
Receivables $90,000
Inventories $600,000
Cash $10,000
No single wage earners had over $2,000 in claims, and there were no unfounded pension plan liabilities.
- How much will the trustee receive?
- How much will the mortgage bondholder receive?
- How much will the notes payables holders receive?
- How much will the subordinated bondholders receive?
- How much will the accounts payable holders receive?
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