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The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value $ 99,000 $128,000 219,000 Receivables Inventory Buildings Liabilities Common stock Additional paid-in capital Retained earnings (deficit) 248,000 438,000 319,000 319,000 319,000 349,000 58,000 (89,000) The company's assets have a $869,000 reorganization value. As part of the reorganization, the company's owners transferred 75 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.)

The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value $ 99,000 $128,000 219,000 Receivables Inventory Buildings Liabilities Common stock Additional paid-in capital Retained earnings (deficit) 248,000 438,000 319,000 319,000 319,000 349,000 58,000 (89,000) The company's assets have a $869,000 reorganization value. As part of the reorganization, the company's owners transferred 75 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.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a. record the entry to adjust asset values to fair value

b. record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and eliminate deficit. 

 

The Larisa Company is exiting bankruptcy reorganization with the following accounts: Receivables Inventory Buildings Liabilities Book Value Fair Value $ 99,000 $128,000 219,000 319,000 319,000 349,000 248,000 438,000 319,000 Common stock Additional paid-in сapital Retained earnings (deficit) 58,000 (89,000) The company's assets have a $869,000 reorganization value. As part of the reorganization, the company's owners transferred 75 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.)
Transcribed Image Text:The Larisa Company is exiting bankruptcy reorganization with the following accounts: Receivables Inventory Buildings Liabilities Book Value Fair Value $ 99,000 $128,000 219,000 319,000 319,000 349,000 248,000 438,000 319,000 Common stock Additional paid-in сapital Retained earnings (deficit) 58,000 (89,000) The company's assets have a $869,000 reorganization value. As part of the reorganization, the company's owners transferred 75 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.)
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Record the entry to adjust asset values to fair value.

Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.

How do I do this? What part of this is the adjust asset value and what part is the deficit entry

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