LiquidationSouthwestern Wear Inc. has the following balance sheet:Current assets$1,875,000 Accounts payable$ 375,000Fixed assets1,875,000 Notes payable750,000Subordinated debentures750,000Total debt$1,875,000Common equity1,875,000Total assets$3,750,000 Total liabilities & equity$3,750,000The trustee's costs total $310,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only to the notes payable. If the firm goes bankrupt andliquidates, how much will each class of investors receive if a total$2.7 million is received from sale of the assets? Round your answers for monetary values to the nearest dollar and for percentage values to the nearest wholenumber. If your answer is zero, enter "0". Enter your answers as positive values.Distribution of proceeds on liquidation:Proceeds from the sale of assets24Less:1. First mortgage (paid from the sale of fixed assets)2. Fees and expenses of bankruptcy3. Wages due to workers within 3 months of bankruptcy4. Taxes due to federal, state, and local governments5. Unfunded pension liabilitiesFunds available for distribution to general creditors$Distribution to general creditors:Distribution afterPercentage ofGeneral Creditors'Application of 100%SubordinationOriginal ClaimClaimsAmount of ClaimDistributionAdjustmentReceived(1)(2)(3)(4)(5)Accounts payable242$%Notes payableSubordinateddebenturesTotal$$$4Round your answer for monetary value to the nearest dollar and for percentage value to two decimal places.The remaining $will go to the common stockholders. They will receive only% of the amount of equity on the balance sheet.

General creditors refer to the creditors who lend money to the borrower but they don't have an…

uthwestern Wear Inc. has the following balance sheet: $1,875,000 Accounts payable $ 375,000 rrent assets ed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total debt $1,875,000 Common equity 1,875,000 $3,750,000 $3,750,000 Total liabilities & equity cal assets e trustee's costs total $310,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded i uidates, how much will each class of investors receive if a total of $2.7 million is received from sale of the asse mber. If your answer is zero, enter "0". Enter your answers as positive values. stribution of proceeds on liquidation: oceeds from the sale of assets ss: First mortgage (paid from the sale of fixed assets)

uthwestern Wear Inc. has the following balance sheet: $1,875,000 Accounts payable $ 375,000 rrent assets ed assets 1,875,000 Notes payable 750,000 Subordinated debentures 750,000 Total debt $1,875,000 Common equity 1,875,000 $3,750,000 $3,750,000 Total liabilities & equity cal assets e trustee's costs total $310,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded i uidates, how much will each class of investors receive if a total of $2.7 million is received from sale of the asse mber. If your answer is zero, enter "0". Enter your answers as positive values. stribution of proceeds on liquidation: oceeds from the sale of assets ss: First mortgage (paid from the sale of fixed assets)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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