The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair
The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 100,000 $ 130,000 Inventory 220,000 250,000 Buildings 320,000 440,000 Liabilities 320,000 320,000 Common stock 350,000 Additional paid-in capital 60,000 Retained earnings (deficit) (90,000 )
The company's assets have a $870,000 reorganization value. As part of the reorganization, the company's owners transferred 80 percent of the outstanding stock to the creditors.
Prepare the journal entry that is necessary to adjust the company's records to fresh start accounting.
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