The trial balance of Sussex Inc. as at December 31, Year 6, is as follows: Debit...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The trial balance of Sussex Inc. as at December 31, Year 6, is as follows: Debit $ 45,000 95,000 Cash Accounts receivable Allowance for doubtful accounts Inventory Property, plant, and equipment Accumulated depreciation Patents Accounts payable Notes payable (10% interest) Accrued interest on notes 12% bonds payable Common stock (9,000 shares) Retained earnings (deficit) 150,000 540,000 120,000 Credit 18,000 210,000 110,000 150,000 40,000 400,000 200,000 178,000 $1,128,000 $1,128,000 The following reorganization plan has been approved by the shareholders and the creditors: • The holders of the notes payable agree to cancel the accrued interest owing, to extend the due date, and to reduce the interest rate. In return they will receive a pledge of inventory and receivables as security throughout the life of the notes. • Trade creditors agree to accept a payment of $95,000 as full settlement of their claims. • The bondholders agree to exchange their bonds for $250,000 in 8% first-mortgage bonds and 15,000 common shares. • The deficit is to be eliminated. • All parties have agreed that the following reflect the fair values of the individual assets: Accounts receivable Allowance for doubtful accounts Inventory Property, plant, and equipment Patents Required: (a) Prepare the journal entries to record the reorganization. (b) Prepare a balance sheet after the reorganization. $ 72,000 2,000 130,000 250,000 190,000 The trial balance of Sussex Inc. as at December 31, Year 6, is as follows: Debit $ 45,000 95,000 Cash Accounts receivable Allowance for doubtful accounts Inventory Property, plant, and equipment Accumulated depreciation Patents Accounts payable Notes payable (10% interest) Accrued interest on notes 12% bonds payable Common stock (9,000 shares) Retained earnings (deficit) 150,000 540,000 120,000 Credit 18,000 210,000 110,000 150,000 40,000 400,000 200,000 178,000 $1,128,000 $1,128,000 The following reorganization plan has been approved by the shareholders and the creditors: • The holders of the notes payable agree to cancel the accrued interest owing, to extend the due date, and to reduce the interest rate. In return they will receive a pledge of inventory and receivables as security throughout the life of the notes. • Trade creditors agree to accept a payment of $95,000 as full settlement of their claims. • The bondholders agree to exchange their bonds for $250,000 in 8% first-mortgage bonds and 15,000 common shares. • The deficit is to be eliminated. • All parties have agreed that the following reflect the fair values of the individual assets: Accounts receivable Allowance for doubtful accounts Inventory Property, plant, and equipment Patents Required: (a) Prepare the journal entries to record the reorganization. (b) Prepare a balance sheet after the reorganization. $ 72,000 2,000 130,000 250,000 190,000
Expert Answer:
Answer rating: 100% (QA)
required solution Journal Entries Accrued Interest on Notes 40000 Capital Reduction 40000 Accounts P... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A review of the notes payable files discovers that three years ago the company reported the entire amount of a payment (principal and interest) on an installment note payable as interest expense....
-
A review of the notes payable files discovers that three years ago the company reported the entire $1,000 cash payment (consisting of $800 principal and $200 interest) toward an installment note...
-
The isentropic compressibility coefficient it's define by: av s=-1 (37) s ap aVT Cp Ks=- b) Demonstrate that Ks-Kt-- c) In general. for any substance, in which compression will decrease the volume...
-
Cinderella's income increases by 25%. She decides to increase her purchases of glass slippers by 40%. To her, glass slippers are a(n)____________good and her income elasticity of demand for glass...
-
If a separate statement of comprehensive income is presented, do all elements of comprehensive income appear in this statement?
-
Derive the nodal finite-difference equations for the following configurations. (a) Node m, n on a diagonal boundary subjected to convection with a fluid at T and a heat transfer coefficient h. Assume...
-
In 2014, Air Asia Flight No. 8501 crashed in the Java Sea while flying from Indonesia to Singapore. The crash resulted in the deaths of all passengers and crew on board. The plane involved in the...
-
Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $68 per unit. The company, which is currently operating below full capacity, charges...
-
1) Write a Python function to convert mass values from gram to ounce and return the conversion result. The conversion formula is ounce = gram x 0.035274. The function header is: def gm_to_ounce...
-
It took a long time but the Securities and Exchange Commission finally acted and held auditors responsible for the fraud that occurred in banks during the financial recession. Surprisingly to some,...
-
Find the direction cosines of a line which makes equal angles with the coordinate axes.
-
On May 1, 2020, Boyles Company purchased an equipment for $180,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method of...
-
Julie received the following amount during 2013. Net salary of $35,000 after deductions of $8,400, Part-time cash income $3,400, Inheritance from Late Aunt $22,000, Year-end bonus from Employer - 3%...
-
Dirk transferred depreciable property to the Frank Partnership for a one-half interest in the partnership. The property had an adjusted basis of $42,000 and a FMV of $56,000. The property was subject...
-
The accounting system based on recognizing income (revenues) when money (cash) is received and reporting expenses (expenses) when money (cash) is paid, is known as Select one: a. Operating cycle...
-
A business analyst is tasked with presenting the annual sales data of a company to identify trends over time and compare the performance of different product categories. The data includes time series...
-
What is the gross profit from this? SUMMARY OF INCOME 2015 2016 2017 2018 2019 Total revenues $ 149,558 $ 151,800 $ 156,776 $ 160,338 $ 155,900 Income/(Loss) before income taxes $ 10,179 $ 6,784 $...
-
Find a polar equation for the curve represented by the given Cartesian equation. 4y 2 = x
-
Review the Best Buy balance sheet in Appendix A. Identify three accounts on its balance sheet that carry debit balances and three accounts on its balance sheet that carry credit balances.
-
The following data are for the two products produced by Aplan Company. The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows. Required 1. Compute the...
-
What are the relations among standard costs, flexible budgets, variance analysis, and management by exception?
-
(a) An amount of substance equal to 2 kmols of an ideal gas at temperature \(T\) and pressure \(p\) is contained in a compartment. In an adjacent compartment is an amount of substance equal to \(1...
-
The exhaust gas from a two-stroke cycle compression-ignition engine is exhausted at an elevated pressure into a large chamber. The gas from the chamber is subsequently expanded in a turbine. If the...
-
The following data refer to an analysis of a dual combustion cycle with a gas having specific heats varying linearly with temperature: The pressure and temperature of the gas at the end of...
Study smarter with the SolutionInn App