Assume that Martin Company acquires $2,400 cash from creditors and $3,400 cash from investors.
Required:
a. Explain the primary differences between investors and creditors.
b. If Martin has net income of $1,500 and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?
c. If Martin has a net loss of $1,500 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?
d. If Martin has a net loss of $3,900 cash and then liquidates, what amount of cash will the creditors receive? What amount of cash will the investors receive?