Southwestern Wear Inc

Southwestern Wear Inc. has the following balance sheet:

Current assets $1,875,000

Accounts payable $375,000

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 $251,500, 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 and liquidates, how much will each class of investors receive if a total of $3 million is received from sale of the assets?

Distribution of proceeds on liquidation:

1. Proceeds from sale of assets - $_________

2. First mortgage, paid from sale of assets $_____

3. Fees and expenses of administration of bankruptcy $______

4. Wages due workers earned within 3 months $______

prior to filing of bankruptcy petition $______ 

5. Taxes$ 

6. Unfunded pension liabilities$ 7. Available to general creditors $_____

Distribution to general creditors:

Claims of General Creditors Claim (1) Application of 100% Distribution (2) After subordination Adj (3) % of Original Claims Received (4) Notes Payable Accounts Payable $$ Subordinate Debentures Total 
 

The remaining $_____ will go to the common stockholders.