Becket Corporation's accountant has prepared the following balance sheet as of November 10, 2020, 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, 2020 Assets Cash $ 14,000 Accounts receivable (net) 63,000 Investments 28,000 Inventory (net realizable value is expected to approximate 80% of cost) 82,000 Land 59,000 Buildings (net) 250,000 Equipment (net) 121,000 Total assets $ 617,000 Liabilities and Equities Accounts payable $ 131,000 Notes payablecurrent (secured by equipment) 222,000 Notes payable(due in 2023) (secured by land and buildings) 327,000 Common stock ($10 par value) 60,000 Retained earnings (deficit) (123,000 ) Total liabilities and equities $ 617,000

The company has presented the following proposal:

The reorganization value of the companys assets prior to issuing additional shares mentioned later in the proposal, selling the companys investment, and conveying title to the land is set at $660,000 based on discounted future cash flows. Accounts receivable of $22,000 are written off as uncollectible. Investments are worth $44,000, land is worth $84,000, the buildings are worth $304,000, and the equipment is worth $88,000. An outside investor has been found to buy 7,000 shares of common stock at $11 per share. The company's investments are to be sold for $44,000 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 $132,000 of notes due in 2024 that pay 9 percent annual cash interest. All accounts payable will be exchanged for $42,000 in notes payable due in 2021 that pay 7 percent annual cash interest. Title to land costing $22,000 but worth $52,000 will be transferred to the holders of the note payable due in 2023. In addition, these creditors will receive $175,000 in notes payable (paying 9 percent annual interest) coming due in 2027. These creditors also are issued 3,000 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

Please tell me what I did wrong

No Transaction General Journal Debit Credit 1 1 Investments Land 16,000 25,000 54,000 21,000 X Buildings Goodwill OOOOOOOO Accounts receviable Inventory Equipment Additional paid-in capital 22,000 18,000 33,000 43,000 2 2 Cash 77,000 Common stock Additional paid-in capital 74,000 4,000 O 3 3 Cash 44,000 Investments 44,000 4 4 Notes payable current 222,000 Cash Notes payable (due in 2021) Gain on discharge of debt 44,000 132,000 46,000 5 Oi 131,000 Accounts payable Notes payable (due in 2021) Gain on discharge of debt ooo 42,000 89,000 6 6 327,000 Notes payable (due in 2023) Land Notes payable (due in 2027) Common stock Additional paid-in capital Gain on discharge of debt OOOOOO 52,000 175,000 30,000 25,125 44,875 X 7 7 179,875 X Gain on discharge of debt Additional paid-in capital Retained earnings 61,875 118,000 X

Question

Becket Corporation's accountant has prepared the following balance sheet as of November 10, 2020, 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, 2020 Assets Cash $ 14,000 Accounts receivable (net) 63,000 Investments 28,000 Inventory (net realizable value is expected to approximate 80% of cost) 82,000 Land 59,000 Buildings (net) 250,000 Equipment (net) 121,000 Total assets $ 617,000 Liabilities and Equities Accounts payable $ 131,000 Notes payablecurrent (secured by equipment) 222,000 Notes payable(due in 2023) (secured by land and buildings) 327,000 Common stock ($10 par value) 60,000 Retained earnings (deficit) (123,000 ) Total liabilities and equities $ 617,000

The company has presented the following proposal:

The reorganization value of the companys assets prior to issuing additional shares mentioned later in the proposal, selling the companys investment, and conveying title to the land is set at $660,000 based on discounted future cash flows. Accounts receivable of $22,000 are written off as uncollectible. Investments are worth $44,000, land is worth $84,000, the buildings are worth $304,000, and the equipment is worth $88,000. An outside investor has been found to buy 7,000 shares of common stock at $11 per share. The company's investments are to be sold for $44,000 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 $132,000 of notes due in 2024 that pay 9 percent annual cash interest. All accounts payable will be exchanged for $42,000 in notes payable due in 2021 that pay 7 percent annual cash interest. Title to land costing $22,000 but worth $52,000 will be transferred to the holders of the note payable due in 2023. In addition, these creditors will receive $175,000 in notes payable (paying 9 percent annual interest) coming due in 2027. These creditors also are issued 3,000 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

Please tell me what I did wrong

image text in transcribed

No Transaction General Journal Debit Credit 1 1 Investments Land 16,000 25,000 54,000 21,000 X Buildings Goodwill OOOOOOOO Accounts receviable Inventory Equipment Additional paid-in capital 22,000 18,000 33,000 43,000 2 2 Cash 77,000 Common stock Additional paid-in capital 74,000 4,000 O 3 3 Cash 44,000 Investments 44,000 4 4 Notes payable current 222,000 Cash Notes payable (due in 2021) Gain on discharge of debt 44,000 132,000 46,000 5 Oi 131,000 Accounts payable Notes payable (due in 2021) Gain on discharge of debt ooo 42,000 89,000 6 6 327,000 Notes payable (due in 2023) Land Notes payable (due in 2027) Common stock Additional paid-in capital Gain on discharge of debt OOOOOO 52,000 175,000 30,000 25,125 44,875 X 7 7 179,875 X Gain on discharge of debt Additional paid-in capital Retained earnings 61,875 118,000 X