Southwestern Wear Inc. has the following balance sheet:
| Current assets | $1,875,000 | | Accounts payable | $ 375,000 |
| Fixed assets | 1,875,000 | | Notes payable | 750,000 |
| | | Subordinated debentures | 750,000 |
| | | Total debt | $1,875,000 |
| | | Common equity | 1,875,000 |
| Total assets | $3,750,000 | | Total liabilities and equity | $3,750,000 |
The trustee's costs total $290,500, and the firm has no accruedtaxes or wages. Southwestern has no unfunded pension liabilities.The debentures are subordinated only to the notes payable. If thefirm goes bankrupt and liquidates, how much will each class ofinvestors receive if a total of $2.3 million is received from saleof the assets? Round your answers for monetary values to thenearest dollar and for percentage values the nearest whole number.If your answer is zero, enter “0”. Enter your answers as positivevalues.
Distribution of proceeds on liquidation:
| Proceeds from the sale of assets | $ |
| Less: | |
| 1. First mortgage (paid from the sale of assets) | | |
| 2. Fees and expenses of bankruptcy | | |
| 3. Wages due to workers within 3 months of bankruptcy | | |
| 4. Taxes due to federal, state, and local governments | | |
| 5. Unfunded pension liabilities | | |
| Funds available for distribution to general creditors | $ |
Distribution to general creditors:
General Creditors’ Claims
(1) |
Amount of Claim
(2) |
Application of 100% Distribution
(3) | Distribution after Subordination Adjustment
(4) | Percentage of Original Claim Received
(5) |
| Notes payable | $ | $ | $ | % |
| Accounts payable | | | | |
| Subordinated debentures | | | | |
| Total | $ | $ | $ | |
Round your answer for monetary value to the nearest dollar andfor percentage value to two decimal places.
The remaining $ will go to the commonstockholders. They will receive only % of theamount of equity on the balance sheet.
