Supplemental Problem 15-4Quasi ReorganizationDavis Corporation has incurred losses from operations for several years. At the recommendationof the newly hired president, the board of directors voted to implement a quasi-reorganization,subject to stockholder approval. Immediately prior to the restatement, on June 30, Davis'sbalance sheet was as follows:Current assetsProperty, plant, and equipment (net)Other assetsTotal liabilitiesCommon stock ($10 par, 160,000 shares)Additional paid-in capitalRetained earnings (deficit)550,0001,350,000200,000$2,100,000600,0001,600,000300,000(400,000)$2,100,000The stockholders approved the quasi-reorganization effective July 1. It was determined thatOther Assets had a fair value of $50,000 and Property, Plant, and Equipment (net) a fair value of$1,000,000.Required:Make the necessary journal entries to complete the quasi-organization, adjusting the capitalstructure as necessary but without a stockholder assessment.

It has been given in the question that board of directors has implement a quasi-reorganization and…

Answered: Make the necessary journal entries to…

Make the necessary journal entries to complete the quasi-organization, adjusting the capital structure as necessary but without a stockholder assessment.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter21: Corporations: Taxes, Earnings, Distributions, And The Statement Of Retained Earnings

Section: Chapter Questions

Problem 10SPA

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Question

Supplemental Problem 15-4
Quasi Reorganization
Davis Corporation has incurred losses from operations for several years. At the recommendation
of the newly hired president, the board of directors voted to implement a quasi-reorganization,
subject to stockholder approval. Immediately prior to the restatement, on June 30, Davis's
balance sheet was as follows:
Current assets
Property, plant, and equipment (net)
Other assets
Total liabilities
Common stock ($10 par, 160,000 shares)
Additional paid-in capital
Retained earnings (deficit)
550,000
1,350,000
200,000
$2,100,000
600,000
1,600,000
300,000
(400,000)
$2,100,000
The stockholders approved the quasi-reorganization effective July 1. It was determined that
Other Assets had a fair value of $50,000 and Property, Plant, and Equipment (net) a fair value of
$1,000,000.
Required:
Make the necessary journal entries to complete the quasi-organization, adjusting the capital
structure as necessary but without a stockholder assessment.

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