At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the balance sheet provided in the Microsoft Excel Online file below. The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $460,000, while the current assets were sold for another $320,000. Thus, the total proceeds from the liquidation sale were $780,000. The trustee's costs amounted to $60,000; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. 1. How much will McDaniel's shareholders receive from the liquidation?
2. How much will the mortgage bondholders receive?
3. How much will other priority claimants receive from the liquidation?
4. How much will the remaining general creditors receive from the distribution before subordination adjustment?
5. What is the effect of adjusting for subordination?