The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 87,000 $ 104,000 Inventory 207,000 224,000 Buildings 307,000 414,000 Liabilities 307,000 307,000 Common stock 337,000 Additional paid-in capital 34,000 Retained earnings (deficit) (77,000 ) The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. Prepare the journal entry (or entries) necessary to adjust the company’s records to fresh start accounting. Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.
The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 87,000 $ 104,000 Inventory 207,000 224,000 Buildings 307,000 414,000 Liabilities 307,000 307,000 Common stock 337,000 Additional paid-in capital 34,000 Retained earnings (deficit) (77,000 ) The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. Prepare the journal entry (or entries) necessary to adjust the company’s records to fresh start accounting. Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Larisa Company is exiting bankruptcy reorganization with the following accounts:
| Book Value | Fair Value | |||||
| Receivables | $ | 87,000 | $ | 104,000 | ||
| Inventory | 207,000 | 224,000 | ||||
| Buildings | 307,000 | 414,000 | ||||
| Liabilities | 307,000 | 307,000 | ||||
| Common stock | 337,000 | |||||
| Additional paid-in capital | 34,000 | |||||
| (77,000 | ) | |||||
The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors.
Prepare the
Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.
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