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Kaplan AC 450 Unit 6 Problem 13-36 Solution

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Question;Problem 13-36 [LO9];Ristoni Company is in the process;of emerging from a Chapter 11 bankruptcy. It will apply fresh start;accounting as of December 31, 2013. The company currently has 40,000 shares;of common stock outstanding with a $320,000 par value. As part of the;reorganization, the owners will contribute 26,000 shares of this stock back;to the company. A retained earnings deficit balance of $471,000 exists at the;time of this reorganization.;The;company has the following asset accounts;Book;Value;Fair;Value;Accounts receivable;$;100,000;$;55,000;Inventory;112,000;100,000;Land and buildings;601,000;650,000;Equipment;57,000;42,000;The company?s liabilities will be;settled as follows. Assume that all notes will be issued at reasonable;interest rates.;?;Accounts payable of $90,000 will;be settled with a note for $7,000. These creditors will also get 1,000 shares;of the stock contributed by the owners.;?;Accrued expenses of $45,000 will;be settled with a note for $6,000.;?;Note payable of $110,000 (due;2017) was fully secured and has not been renegotiated.;?;Note payable of $285,000 (due;2016) will be settled with a note for $60,000 and 14,000 shares of the stock;contributed by the owners.;?;Note payable of $255,000 (due;2014) will be settled with a note for $81,000 and 11,000 shares of the stock;contributed by the owners.;?;Note payable of $236,000 (due;2015) will be settled with a note for $120,000.;The company has a reorganization;value of $944,000.;Prepare all journal entries for;Ristoni so that the company can emerge from the bankruptcy proceeding.(Do not round intermediate calculations. Round your answers;to the nearest dollar amount.)

 

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