During the recent recession, Polydorous Inc. accumulated a deficit in retained earnings. Although still operating at a loss, the company posted better results during 20X1. Polydorous is having trouble paying suppliers on time and is paying interest when it is due. The company files for protection under Chapter 11 of the Bankruptcy Code and has the following liabilities and stockholders equity accounts at the time the petition is filed:

Accounts Payable		$	160,800
Interest Payable			22,000
Notes Payable, 10%, unsecured			341,700
Preferred Stock			100,700
Common Stock, $5 par			150,500
Retained Earnings (deficit)			(75,500	)
Total		$	700,200

A plan of reorganization is filed with the court, which approves it after review and obtaining creditor and investor votes. The plan of reorganization includes the following actions:

1. The prepetition accounts payable will be restructured according to the following: (a) $41,700 will be paid in cash, (b) $20,600 will be eliminated, and (c) the remaining $98,500 will be exchanged for a four-year, secured note payable paying 13 percent interest.
2. The interest payable will be restructured as follows: elimination of $11,000 of the interest and payment of the remaining $11,000 in cash.
3. The 10 percent, unsecured notes payable will be restructured as follows: (a) $62,000 of them will be eliminated, (b) $11,000 of them will be paid in cash, (c) $243,200 of them will be exchanged for a 4-year, 13 percent secured note, and (d) the remaining $25,500 will be exchanged for 2,550 shares of newly issued common stock having a par value of $10.
4. The preferred shareholders will exchange their stock for 5,130 shares of newly issued $10 par common stock.
5. The common shareholders will exchange their stock for 2,070 shares of newly issued $10 par common stock.

After extensive analysis, the companys reorganization value is determined to be $513,700 prior to any payments of cash required by the reorganization plan. An additional $10,800 in current liabilities have been incurred since the petition was filed. After the reorganization is completed, the capital structure of the company will be as follows:

Current liabilities (postpetition)	$	10,800
Notes payable, 13%, secured		341,700
Common stock ($10 par)		97,500
Postreorganization capital structure	$	450,000

An evaluation of the assets fair values was made after the company completed its reorganization, immediately prior to the point the company emerged from the proceedings. The following information is available:

	Book Value				Fair Value
Cash	$	32,000			$	32,000
Accounts receivable (net)		142,000				110,400
Inventory		26,300				19,700
Property, plant & equipment (net)		447,000				263,400
Total	$	647,300			$	425,500

Required:

d. Prepare the balance sheet for the company on completion of the plan of reorganization. For retained earnings enter the net change in Fresh Start. (Amounts to be debited should be entered as positive and amounts to be credited should be entered as negative.)

		Adjustments to Record Confirmation of Plan			Company's
	Pre- confirmation	Debt Discharge	Exchange of Stock	Fresh Start	Reorganized Balance Sheet
Assets:
Cash
Accounts receivable (net)
Inventory
Total
Property, plant and equipment (net)
Reorganization value in excess of amounts allocable to identifiable assets
Total assets
Liabilities:
Liabilities not subject to compromise:
Current liabilities
Liabilities subject to compromise
Notes Payable, 12%, secured
Total Liabilities
Shareholders' equity:
Preferred stock
Common stock (old)
Common stock (new)
Additional paid-in capital
Retained earnings
Total shareholders' equity
Total liabilities and shareholders equity