Reference no: EM132895906

In the goal of restructuring, the H Corporation has submitted a voluntary petition to the bankruptcy court. A financial statement was generated for the firm revealing the following debts:

H holds outstanding 10,000 common shares with a par value of $5 per share. It also has a deficit balance of $ 132,000 at the moment. The following restructuring proposal has been recommended by company officials:

• The entire book value of the company's assets is $210,000, which is deemed fair value. However, the total restructuring value of the assets is $225,000.
• Employees get a one-year bill instead of all pay due. Interest will be 10 percent, a regular liability rate.
• All future interest on a fully secured debt will fall from a 15% rate, which is currently unachievable, to a 10% rate.
• A new $30,000 bill paying 10 percent yearly interest shall be fulfilled with the partly guaranteed bill payment. This creditor will also get 5000 additional shares in the common stock of h.
• An external investor has been engaged to purchase 6,000 new common stock shares at $6 per share. The unsecured lenders will be given the remaining obligations 20 cents per dollar.

Question 1: What journal entries would H Corporation make when this restructuring plan is authorized and becomes effective?

Question 2: As a beginning of the company, A, B and C create partnership. A contributes most money, but does not aim to participate directly in day-to-day operations. B has some experience and a bulk of the day's labor is anticipated. C has long been in this company and has numerous contacts. She will thus dedicate most of her time to new customers. What is your message memo to these three partners offering at least two distinct methods in which the partnership earnings might be shared annually in terms of fairness to all parties?