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	$	161,500
Interest Payable		22,200
Notes Payable, 10%, unsecured		340,600
Preferred Stock		102,000
Common Stock, $5 par		151,700
Retained Earnings (deficit)		(83,900	)
Total	$	694,100

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) $40,100 will be paid in cash, (b) $21,500 will be eliminated, and (c) the remaining $99,900 will be exchanged for a four-year, secured note payable paying 12 percent interest.
2.	The interest payable will be restructured as follows: elimination of $11,100 of the interest and payment of the remaining $11,100 in cash.
3.	The 10 percent, unsecured notes payable will be restructured as follows: (a) $60,800 of them will be eliminated, (b) $11,100 of them will be paid in cash, (c) $240,700 of them will be exchanged for a 4-year, 12 percent secured note, and (d) the remaining $28,000 will be exchanged for 2,800 shares of newly issued common stock having a par value of $10.
4.	The preferred shareholders will exchange their stock for 5,120 shares of newly issued $10 par common stock.
5.	The common shareholders will exchange their stock for 2,130 shares of newly issued $10 par common stock.

After extensive analysis, the companys reorganization value is determined to be $514,900 prior to any payments of cash required by the reorganization plan. An additional $11,500 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)	$	11,500
Notes payable, 12%, secured		340,600
Common stock ($10 par)		100,500
Postreorganization capital structure	$	452,600

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)		140,200			111,000
Inventory		25,900			18,500
Property, plant & equipment (net)		445,200			263,000
Total	$	643,300		$	424,500

Required:

a.

Prepare a plan of reorganization recovery analysis for the liability and stockholders equity accounts of Polydorous Inc. on the day the plan of reorganization is approved. (Hint: The liabilities on the plans approval day are $535,800, which is $524,300 from prepetition payables plus $11,500 in additional accounts payable incurred postpetition.)

Please provide formulas.

Required: Prepare a plan of reorganization recovery analysis for the liability and stockholders' equity accounts of Polydorous Inc. on the day the plan of reorganization is approved. (Hint: The liabilities on the plan's approval day accounts payable incurred postpetition.) (Negative amounts should be indicated by a minus sign.) a. $535,800, which is $524,300 from prepetition payables plus $11,500 in additional are Answer is not complete. POLYDOROUS CORPORATION Plan of Reorganization Recovery Analysis Recovery 12% Secured Common Stock Total Recovery Elimination Pre- Confirmation of Debt Surviving Debt Cash Notes % Value % and Equity Post-petition liabilities (11,500) (11,500) (11,500) 100 Claims/Interest Accounts payable 87 Interest payable 50 Notes payable, 82 10% Total 0 Preferred shareholders Common shareholders Retained earnings deficit Total (11,500) 0 (11,500) 0 C 0 0 (11,500) b. Prepare an analysis showing whether the company qualifies for fresh start accounting as it emerges from the reorganization based on the reorganization value of its assets and postpetition liabilities & allowed claims. Answer is not complete. First condition 11,500 Post-petition liabilities Liabilities deferred pursuant to Chapter 11 proceedings Total post-petition liabilities and allowed claims 11,500 Reorganization value c. Prepare jourmal entries for execution of the plan of reorganization with its general restructuring of debt and capital. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) General Journal No Event Debit Credit