Question: The balance sheet for the LR Corp is presented below. The only asset on balance sheet is in excess of fair market value is inventory,

The balance sheet for the LR Corp is presented below. The only asset on balance sheet is in excess of fair market value is inventory, which has a FMV of $60,000. LR is planning to undertake a quasi-reorganization.

A. Explain why a company in LR's position may want to undertake a quasi-reorganization? B. What steps are involved in a quasi-reorganization? C. Present the necessary journal entries?

Cash 30,000
Receivables 55,000
Inventory 70,000
PP&E (net) 175,000
Total Assets 330,000
Liabilities 150,000
Common Stock 100,000
Additional paid-in-capital 220,000
Retained Earnings (140,000)
Total Liabilities & SE 330,000

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