Addison Corporation is currently going through a Chapter 11 bankruptcy. The company has the following account balances for thecurrent year.DebitCredit$ 45,000232,000Advertising expenseCost of goods soldDepreciation expenseInterest expense43,0009,000Interest revenue$ 43,000Loss on closing of branch as part of reorganization130,00092,00037,000Professional feesRent expenseRevenues614,000Salaries expense91,000Prepare an income statement for this organization. The effective tax rate is 20 percent (realization of any tax benefits is anticipated).(Negative amounts under "Reorganization items" should be indicated by a minus sign. All other amounts should be entered aspositive.)ADDISON CORPORATIONIncome StatementCosts and expenses:< Prev4 of 4NextMacBook Pro ADDISON CORPORATIONIncome StatementCosts and expenses:Earnings before reorganization items and tax effects$4Reorganization items:0.0.%24%24%24

Income statement: The financial statement which reports revenues and expenses from business…

Answered: Addison Corporation is currently going…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 6P

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Borden Corporation is undergoing Chapter 7 liquidation . Currently it has cash of $ 130,000 , inventory with a carrying value of $ 650,000 and equipment with a carrying value of $ 775,000 . It owes $ 2,100,000 to unsecured creditors . During the current month , the trustee sells Borden's entire inventory for $ 290,000 , sells equipment with a carrying value of $ 100,000 for $ 120,000 , accrues and pays administrative expenses of $ 5,000 , and pays creditors $ 400,000 On the statement of estate equity at the end of the month , the estate equity balance is Select one : a . $ ( 890,000 ) B. $ ( 1,290,000 ) C. $ ( 930,000 ) d . 905,000 )
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. 1) Record the entry to adjust asset values to fair value. 2) 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. 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.
Hilfmir Corporation filed for Chapter 11 bankruptcy on January 1, 2014. A summary of their financial status is shown below on June 30, 2014, at the date of the approved reorganization, along with the fair value of their assets. Per Books Fair ValueCash $ 134,000 $ 134,000A/R - net 20,000 20,000Inventory 32,000 40,000Plant Assets - net 114,000 106,000Patent 80,000 0 $ 380,000 A/P $ 60,000Wages Payable 20,000Prepetition liab. 250,000Common Stock 140,000Deficit…
The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 95,000 $ 120,000 Inventory 215,000 240,000 Buildings 315,000 430,000 Liabilities 315,000 315,000 Common stock 345,000 Additional paid-in capital 50,000 Retained earnings (deficit) (85,000 ) The company's assets have a $835,000 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2017. The company currently has 30,000 shares of common stock outstanding with a $240,000 par value. As part of the reorganization, the owners will contribute 18,000 shares of this stock back to the company. A retained earnings deficit balance of $330,000 exists at the time of this reorganization.The company has the following asset accounts: Book Value Fair value Accounts receivable $100000 $80000 Inventory 112000 90000 Land and buildings 420000 500000 Equipment 78000 65000 The company’s liabilities will be settled as follows. Assume that all notes will be issued at reasonable interest rates.∙ Accounts payable of $80,000 will be settled with a note for $5,000. These creditors will also get 1,000 shares of the stock contributed by the owners.∙ Accrued expenses of $35,000 will be settled with a note for $4,000. Note payable of…
Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows: Estimated Realizable Book Value ValueCash $ 10,000 $ 10,000Accounts receivable-net 60,000 50,000Inventory 110,000 65,000Land 20,000 35,000Building 200,000 126,000Goodwill…
Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows: Estimated Realizable Book Value ValueCash $ 10,000 $ 10,000Accounts receivable-net 60,000 50,000Inventory 110,000 65,000Land 20,000 35,000Building 200,000 126,000Goodwill…
The Larisa Company is exiting bankruptcy reorganization with the following account balances: Net Book Value Fair Value Receivables $ 80,000 $ 90,000 Inventory 200,000 210,000 Buildings 300,000 400,000 Liabilities 800,000 800,000 Common stock 130,000 Additional paid-in capital 20,000 Retained earnings (deficit) (370,000) Larisa Company’s assets have a $760,000 reorganization value. As part of the reorganization plan, the company’s owners transferred 80 percent of the outstanding stock to the creditors in exchange for a $500,000 reduction in the liabilities. Required: Prepare the journal entry (or entries) necessary to adjust the company’s records to fresh start accounting. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $80000 $90000 Inventory 200000 210000 Buildings 300000 400000 Liabilities 300000 300000 Common stock 330000 Additional paid-in capital 20000 Retained earnings (deficit) (70000) The company’s assets have a $760,000 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.
Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2017. The company currently has 30,000 shares of common stock outstanding with a $240,000 par value. As part of the reorganization, the owners will contribute 18,000 shares of this stock back to the company. A retained earnings deficit balance of $330,000 exists at the time of this reorganization.The company has the following asset accounts:The company’s liabilities will be settled as follows. Assume that all notes will be issued at reasonable interest rates.Accounts payable of $80,000 will be settled with a note for $5,000. These creditors will also get 1,000 shares of the stock contributed by the owners.Accrued expenses of $35,000 will be settled with a note for $4,000.• Note payable of $100,000 (due 2021) was fully secured and has not been renegotiated.• Note payable of $200,000 (due 2020) will be settled with a note for $50,000 and 10,000 shares of the…

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