Question

The following balance sheet represents Boles Electronics Corporation's position at the time filed for bankruptcy (in thousands of dollars): Cash $10 Accounts payable $1,600 Receivables 100 Notes payable 500 Inventories 890 Wages payable 150 Taxes payable 50 Total current assets $1,000 Total current liabilities $2,300 Net Plant 4,000 Mortgage bonds 2,000 Net equipment 5,000 Subordinated debentures 2,500 Preferred stock 1,500 Common stock 1,700 Total Assets $10,000 Total Claims $10,000 The mortgage bonds are secured by the plant, but not by the equipment. The subordinated debentures are subordinated to notes payable. The firm was unable to reorganize under Chapter 11; therefore, it was liquidated under Chapter 7. The trustee, whose legal and administrative fees amounted to $200,000, sold off the assets and received the following proceeds (in thousands of dollars): Asset Proceeds Plant $1,600 Equipment 1,300 Receivables 50 Inventories 240 Total $3,190 In addition, the firm had $10,000 in cash available for distribution. No single wage earner had over $2,000 in claims, and there were no unfounded pension plan liabilities. b. Determine the dollar distribution to each creditor and to the trustee. What percentage of each claim is satisfied?

          The following balance sheet represents Boles Electronics Corporation's position at the time filed for bankruptcy (in thousands of dollars):
Cash			$10		Accounts payable	$1,600
Receivables		100		Notes payable		500
Inventories		890		Wages payable	150
					Taxes payable		50
Total current assets	$1,000	           Total current liabilities	$2,300
Net Plant		4,000		Mortgage bonds	2,000
Net equipment		5,000		Subordinated debentures 2,500
					Preferred stock	1,500
					Common stock	1,700
Total Assets		$10,000	Total Claims		$10,000
The mortgage bonds are secured by the plant, but not by the equipment. The subordinated debentures are subordinated to notes payable. The firm was unable to reorganize under Chapter 11; therefore, it was liquidated under Chapter 7. The trustee, whose legal and administrative fees amounted to $200,000, sold off the assets and received the following proceeds (in thousands of dollars):
Asset			Proceeds
Plant			$1,600
Equipment		1,300
Receivables		50
Inventories		240
Total			$3,190
In addition, the firm had $10,000 in cash available for distribution. No single wage earner had over $2,000 in claims, and there were no unfounded pension plan liabilities.
b. Determine the dollar distribution to each creditor and to the trustee. What percentage of each claim is satisfied?

Added by Andrew C.

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