Please I am asking you very kindly to help me with this calculation for this pro
ID: 2696614 • Letter: P
Question
Please I am asking you very kindly to help me with this calculation for this problem. I am still confused about how to do the problem. The example in the textbook is not clear. You do not have to do it in the Excel build in model. Problem is on page 875 in the textbook.
Start with the partial model in the file Ch22- Problem 05 Build a model.xls on the textboobk's web site. Dunchon Indusries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $900 million, while the current assets were sold for another $401 million. Thus, the total proceeds from the liquidation sales were $1,300 million. The trustee's costs amounted to $1 million; 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 shareholders and all claimants.
Duchon Industries's Balance Sheets (Millions of Dollars)
Current Assets $ 400 Accounts Payable $ 50
Net Fixed Assets $ 600 Accured Taxes $ 40
Accured wages $ 30
Notes Payable $180
Total Current Liabilities $ 300
First-mortgage bonds a $ 300
Second-mortgage bond a $ 200
Debentures $ 200
Subordinate debentures b $ 100
Common Stock $ 50
Retained Earnings $ (150)
------------ ------------
Total Assets $ 1,000 Total Claims $ 1,000
======= =======
Note: a. All fixed assets are pledge as collateral to the mortgage bonds.
b. Subordinated to notes payable only.
Thanks in advance.
Explanation / Answer
amount available for distribution to shareholders and all claimants.=1300-1270=30(Millions of Dollars