(Solution) 11/26/2006 Chapter 24. Ch 24-5 Build A Model At The Time It Defaulted On Its Interest Payments And Filed For Bankruptcy, The McDaniel Mining Company... | Snapessays.com


(Solution) 11/26/2006 Chapter 24. Ch 24-5 Build a Model At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company...


question is attached11/26/2006

 

Chapter 24.

 

Ch 24-5 Build a Model

 

Assets

 

Current assets

 

$400

 

Net fixed assets

 

600

 

Total assets

 

$1,000

 

Liabilities and equity

 

Accounts payable

 

$50

 

Accrued taxes

 

40

 

Accrued wages

 

30

 

Notes payable

 

180

 

Total current liabilities

 

$300

 

300

 

200

 

Debentures

 

200

 

100

 

Common stock

 

50

 

Retained Earnings

 

(150)

 

Total claims

 

$1,000

 

At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had

 

the following balance sheet (in thousands of dollars).

 

The court, after trying unsuccessfully to reorganize the

 

firm, decided that the only recourse was liquidation under Chapter 7.

 

Sale of the fixed assets, which were

 

pledged as collateral to the mortgage bondholders, brought in $40-0,000, while the current assets were sold for

 

another $200,000.

 

Thus, the total proceeds from the liquidation sales were $600,000.

 

Trustee's costs amounted to

 

$50,000; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan

 

liabilities. Determine the amount available for distribution to all claimants.

 

First-mortgage bonds

 

a

 

Second-mortgage bonds

 

a

 

Subordinated debentures

 

b

 

a

 

All fixed assets are pledged as collateral to the mortgage bonds.

 

b

 

Subordinated to notes payable only.

 

A. How much will McDaniels Shareholders Receive from the liquidations?

 

B. How much will the mortgage bondholders Recieve?

 

C.Who are the Primary Claimants (in addition to the mortgage bondholders)? How much will they

 

recieve from the liquidation?

 

D.Who are the remaining general creditiors? How Much will each Recieve from the distribution

 

before subordination adjustment? What is the effect of adjusting for subordination?

 

A. How much will McDaniels Shareholders Receive from the liquidations?

 

B. How much will the mortgage bondholders Recieve?

 

C.Who are the Primary Claimants (in addition to the mortgage bondholders)? How much will they

 

recieve from the liquidation?

 

D.Who are the remaining general creditiors? How Much will each Recieve from the distribution

 

before subordination adjustment? What is the effect of adjusting for subordination?

 


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This question was answered on: May 23, 2022

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