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Prepare the journal entry necessary to adjust the company

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Reference no: EM132957258

The Larisa Company is exiting bankruptcy reorganization with the following accounts:

                                       Book Value                     Fair Value

Receivables                $101,000                        $132,000

Inventory                    221,000                          252,000

Buildings                       321,000                          442,000

Liabilities                        321,000                           321,000

Common stock 351,000

Additional paid-in capital 62,000

Retained earnings (deficit) (91,000)

The company's assets have a $871,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors.

Problem 1: Prepare the journal entry (or entries) necessary to adjust the company's records to fresh start accounting.

Reference no: EM132957258

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