Prepare journal entry that is necessary to adjust the record

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Reference no: EM131900529

Problem

The Larisa Company is coming out of reorganization with the following accounts:

	Book Value	Fair Value
Receivables	89,000	108,000
Inventory	209,000	228,000
Buildings	309,000	418,000
Liabilities	309,000	309,000
Common stock	339,000
Additional paid-in capital	38,000
Retained earnings (deficit)	(79,000)

The company's assets have a $829,000 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.

Reference no: EM131900529

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