Week 5 - Learning Activity eBook Consider Failures Galore Inc using the following tables: Balance Sheet, Failures Galore, Inc.* Assets Liabilities and Equity Current assets $ Fixed assets, net 14,100,000 13,600,000 Accounts payable $ 4,000,000 Bank notes payable 4,000,000 Accrued wages 300,000 Accrued taxes 400,000 Mortgage bonds 4,000,000 Debentures 4,000,000 Subordinated 4,000,000 Total assets $ 27,700,000 debentures Preferred stock Common equity Liabilities and equity $ 3,500,000 3,500,000 27,700,000 *The subordinated debentures are subordinate to the bank notes payable. Assume that all the accrued wages can be paid out of the liquidation proceeds. Distribution of the Proceeds from the Liquidation of Failures Galore, Inc. Total liquidation proceeds 1. Bankruptcy administration expenses 2. Wages owed to employees 3. Taxes owed to governments Total priority claims Funds available for claims of creditors $14,350,000 $450,000 300,000 400,000 $1,150,000 $13,200,000 4. Payment to mortgage bondholders (proceeds from sale of secured assets) 3,000,000