The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $
Question:
The Larisa Company is exiting bankruptcy reorganization with the following accounts:
| Book Value | Fair Value | ||||
Receivables | $ | 80,000 | | $ | 90,000 | |
Inventory | | 200,000 | | | 210,000 | |
Buildings | | 300,000 | | | 400,000 | |
Liabilities | | 300,000 | | | 300,000 | |
Common stock | | 330,000 | | | | |
Additional paid-in capital | | 20,000 | | | | |
Retained earnings (deficit) | | (70,000 | ) | | | |
|
The company's assets have a $760,000 reorganization value. As part of the reorganization, the company's owners transferred 80 percent of the outstanding stock to the creditors.
Prepare the journal entry that is necessary to adjust the company's records to fresh start accounting. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Advanced Accounting
ISBN: 978-0077862220
12th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik