Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet showsVanous avsets $2,600 000TOTALSelect oneOPrepetition labies fully securedPrepetition ablities subject to compromePotpetition abiles$2.500.000 TOTALa $250,000b. 178,000Common stockRetained deficitThere are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $2.470,000 The creditors represented by the prepetition liabilities subject to compromise agree totake $754,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock.The reorganized company's common stock is valued at$130,000d$650.000$520,0001,768,0001,066.000260.000(1014000)$2600000

The correct solution is:1,014,000

Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under & ANIBER nous es 125600000 Preption Subbes y secured TOTAL $2.400.000 TOTAL There are no excess assets. The present value of future cash flows from the reorganued company's operating assets is $2.470,000 The creditors represented by the prepetition lublinies subject to compromise agree take $754.000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock The reorganized company's common stock is valued at Select one O Preption lubicies subject to comprom 1000 $260.000 b. 178,000 $130.000 4 $450.000 260.000 104.000 $200.000

Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under & ANIBER nous es 125600000 Preption Subbes y secured TOTAL $2.400.000 TOTAL There are no excess assets. The present value of future cash flows from the reorganued company's operating assets is $2.470,000 The creditors represented by the prepetition lublinies subject to compromise agree take $754.000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock The reorganized company's common stock is valued at Select one O Preption lubicies subject to comprom 1000 $260.000 b. 178,000 $130.000 4 $450.000 260.000 104.000 $200.000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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