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Kaplan AC 450 Advanced Accounting Unit 6 Problem 13-36

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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;Inventory112,000 100,000;Land and buildings601,000 650,000;Equipment57,000 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.)

 

Paper#80059 | Written in 18-Jul-2015

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