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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

Accrued taxes

50,000

Total current assets

1000,000

Total current liability

$ 2,300,000

Net plant

$ 4,000,000

Mortgage bonds

2,000,000

Net equipment

5,000,000

Subordinated debentures

2,500,000

Preferred stock

1,500,000

Common stock

1,700,000

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.

  1. How much will the trustee receive?
  2. How much will the mortgage bondholder receive?
  3. How much will the notes payables holders receive?
  4. How much will the subordinated bondholders receive?
  5. How much will the accounts payable holders receive?

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