Current Attempt in ProgressThe condensed balance sheets of Ayayai Limited, a small private company that follows ASPE, follow for the periods immediatelybefore, and one year after, it had completed a financial reorganization:BeforeOne YearBeforeOne YearReorganizationAfterReorganizationAfterCurrent assets$200,000$300,000Common shares$2,300,000$1,550,000Buildings (net)1,800,0001,380,000Contributed surplus200,000(Deficit) retained earnings(500,000 )130,000$2,000.000$1,680,000$2,000,000$1,680,000For the year following the financial reorganization, the company reported net income of $155,000 and depreciation expense of$70,000, and paid a cash dividend of $25,000. As part of the reorganization, the company wrote down inventory by $100,000 in orderto reflect circumstances that existed before the reorganization. Also, the deficit, and any revaluation adjustment, was accounted for bycharging amounts against contributed surplus until it was eliminated, with any remaining amount being charged against commonshares. The common shares are widely held and there is no controlling interest. No purchases or sales of plant assets and no sharetransactions occurred in the year following the reorganization.Prepare all the journal entries made at the time of the reorganization. (Credit account titles are automatically indented when the amount isentered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)Account Titles and ExplanationDebitCredit(To record impairment of assets that existedbefore reorganization)(To eliminate deficit)

The question is based on the concept of Financial Accounting.

The condensed balance sheets of Ayayai Limited, a small private company that follows ASPE, follow for the periods immediately before, and one year after, it had completed a financial reorganization: Before One Year Before One Year Reorganization After Reorganization After Current assets $200,000 $300,000 Common shares $2,300,000 $1,550,000 Buildings (net) 1,800,000 1,380,000 Contributed surplus 200,000 (Deficit) retained earnings (500,000 ) 130,000 $2,000,000 $1,680,000 $2,000,000 $1,680,000 For the year following the financial reorganization, the company reported net income of $155,000 and depreciation expense of $70,000, and paid a cash dividend of $25,000. As part of the reorganization, the company wrote down inventory by $100,000 in order

The condensed balance sheets of Ayayai Limited, a small private company that follows ASPE, follow for the periods immediately before, and one year after, it had completed a financial reorganization: Before One Year Before One Year Reorganization After Reorganization After Current assets $200,000 $300,000 Common shares $2,300,000 $1,550,000 Buildings (net) 1,800,000 1,380,000 Contributed surplus 200,000 (Deficit) retained earnings (500,000 ) 130,000 $2,000,000 $1,680,000 $2,000,000 $1,680,000 For the year following the financial reorganization, the company reported net income of $155,000 and depreciation expense of $70,000, and paid a cash dividend of $25,000. As part of the reorganization, the company wrote down inventory by $100,000 in order

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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