Finance Problem – McDaniel Mining Company
On the time it defaulted on its curiosity funds and filed for chapter, the McDanielMining Firm had the steadiness sheet proven under (in 1000's of dollars). The court docket, after making an attempt unsuccessfully to reorganize the agency, determined that the one recourse was liquidation underneath Chapter 7. Sale of the mounted property, which had been pledged as collateral to the mortgage bondholders, introduced in $400,000, whereas the present property had been offered for an additional $200,000. Thus, the overall proceeds from the liquidation sale had been $600,000. The trustee’s prices amounted to $50,000; no single employee was due greater than $2,000 in wages; and there have been no unfunded pension plan liabilities.Present property $ 400 Accounts payable $ 50Internet mounted property 600 Accrued taxes 40Accrued wages 30Notes payable 180Complete present liabilities $ 300First-mortgage bonds(a) 300Second-mortgage bonds(a) 200Debentures 200Subordinated debentures(b)100Widespread inventory 50––––––––Retained earnings (150)Complete property $1,000 Complete claims $1,000(a)All mounted property are pledged as collateral to the mortgage bonds.(b) Subordinated to notes payable solely.SHOW ALL WORK IN EXCEL PLEASEa. How a lot will McDaniel’s shareholders obtain from the liquidation? (Reply $zero)b. How a lot will the mortgage bondholders obtain? (Reply - First mortgage holders, $300,000; Second mortgage holders, $100,000 plus $12,700 as a normal claimant.)c. Who're the opposite precedence claimants (along with the mortgage bondholders)?How a lot will they obtain from the liquidation? ( Reply - Trustee’s bills, $50,000; Wages due, $30,000; Taxes due, $40,000.)d. Who're the remaining normal collectors? How a lot will every obtain from thedistribution earlier than subordination adjustment? What's the impact of adjusting forsubordination? (Reply - Earlier than subordination Accounts payable = $6,350;Notes payable = $22,860; Second mortgage = $12,700 + $100,000; Debentures = $25,400; Sub. debentures = $12,700. After subordination Notes payable = $35,560;Sub. debentures = $zero.)Brigham, Eugene F.; Ehrhardt, Michael C. (2013-01-28). Monetary Administration: Concept & Apply (Finance Titles within the Brigham Household) (Web page 971). Cengage Textbook. Kindle Version.