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Becket Corporation's accountant has prepared the following balance sheet as of November 10, 2017, the date...

Question:

Becket Corporations accountant has prepared the following balance sheet as of November 10, 2017, the date on which the compa
Check my work common stock par value) Retained earnings (deficit) Total liabilities and equities DU, UUU (86,000) $ 697,000 T
View transaction list X ... 1 Record the adjustment entry to change asset values to fair value. > 2 Record the issue of new s
Becket Corporation's accountant has prepared the following balance sheet as of November 10, 2017, the date on which the company is to release a plan for reorganizing operations under Chapter 11 of the Bankruptcy Reform Act: BECKET CORPORATION Balance Sheet November 10, 2017 Assets Cash $ 24,000 Accounts receivable (net) 73,000 Investments 38,000 Inventory (net realizable value is expected to approximate 600 of cost) 92,000 Land 69,000 Buildings (net) 260,000 Equipment (net) 141,000 Total assets $ 697,000 Liabilities and Equities Accounts payable $ 141.000 Notes payable-current (secured by equipment) 245,000 Notes payable-(due in 2020) (secured by land and buildings) 337,000 Common stock ($15 par value) 60,000 Retained earnings (deficit) (86,000) Total liabilities and equities $ 697.000 The company has presented the following proposal: • The reorganization value of the company's assets just prior to issuing additional shares below, selling the company's investment, and conveying title to the land is set at $730,000 based on discounted future cash flows. • Accounts receivable of $44,000 are written off as uncollectible. Investments are worth $64,000, land is worth
Check my work common stock par value) Retained earnings (deficit) Total liabilities and equities DU, UUU (86,000) $ 697,000 The company has presented the following proposal: • The reorganization value of the company's assets just prior to issuing additional shares below, selling the company's investment, and conveying title to the land is set at $730,000 based on discounted future cash flows. • Accounts receivable of $44,000 are written off as uncollectible. Investments are worth $64,000, land is worth $104,000, the buildings are worth $324,000, and the equipment is worth $98,000. • An outside investor has been found to buy 5,000 shares of common stock at $16 per share. • The company's investments are to be sold for $64,000 in cash with the proceeds going to the holders of the current note payable. The remainder of these short-term notes will be converted into $142,000 of notes due in 2021 and paying 9 percent annual cash interest. • All accounts payable will be exchanged for $52,000 in notes payable due in 2018 that pay 7 percent annual interest. • Title to land costing $32,000 but worth $62,000 will be transferred to the holders of the note payable due in 2020. In addition, these creditors will receive $185,000 in notes payable (paying 9 percent annual interest) coming due in 2024. These creditors also are issued 1,000 shares of previously unissued common stock. Becket retains the remainder of its land. Prepare journal entries for Becket to record the transactions as put forth in this reorganization plan. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
View transaction list X ... 1 Record the adjustment entry to change asset values to fair value. > 2 Record the issue of new share to new investors. 3 Record the investment sold. 4 Record the settlement of current notes. Credit 5 Record the settlement of accounts payable. 6 Record the settlement of long term debt. 7 Record the closing entry of gain on debt discharge account. Note: journal entry has been entered

Answers

Journal Entry:1 Dr. Amount ($) Cr. Amount ($) Particulars 26,000 35,000 64,000 29,960 Investments ($64,000-$38,000) Land ($10

Journal Entry: 4 Particulars Dr. Amount ($) Cr. Amount ($) Notes payable-current 245,000 Cash 64,000 Notes payable (due 2021)

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