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Chi 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 $ 35,00 Accounts receivable (net) 84,00 Investments 49,000 Inventory (net realizable value is expected to approximate Bes of cost) 103,800 Land 80,000 Buildings (net) 286,000 Equipment (net) 122,eee Total assets $ 759, een Liabilities and Equities Accounts payable Notes payable-current (secured by equipment) $ 182,00 256.ee Notes payable-(due in 2020) (secured by land and buildings) 348,000 Common stock ($10 par value) 90,000 Retained earnings (deficit) (117,000) Total liabilities and equities $ 759.000 The company has presented the following proposat: . 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 $849,000 based on discounted future cash flows. Accounts receivable of $49,000 are written off as uncollectible. Investments are worth $86,000, land is worth $126,000, the buildings are worth $346,000, and the equipment is worth $109,000 An outside investor has been found to buy 8,000 shares of common stock at $11 per share. The company's investments are to be sold for $86,000 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 $153,000 of notes due in 2021 and paying 9 percent annual cash interest All accounts payable will be exchanged for $63,000 in notes payable due in 2018 that pay 7 percent annual interest Title to land costing $43,000 but worth $73,000 will be transferred to the holders of the note payable due in 2020. In addition, these creditors will receive $201,000 in notes payable (paying 9 percent annual interest) coming due in 2024. These creditors also are issued 2,000 shares of previously unissued common stock. Becket retains the remainder of its land. Record the issue of new share to new investors. Note: Enter debits before credits. Transaction General Journal Debit 2 Credit View an. Journal entry worksheet 2 4 5 0 7 Record the investment sold. Note: Enter debits before credits Transaction General Journal Debit Credit 3 Journal entry worksheet 6 7 Record the settlement of accounts payable. Note: Enter debits before credits. General Journal Debit Credit Transaction 5 Journal entry worksheet
