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		$	160,200
Interest Payable			23,000
Notes Payable, 10%, unsecured			341,000
Preferred Stock			101,500
Common Stock, $5 par			150,800
Retained Earnings (deficit)			(79,900	)
Total		$	696,600

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) $21,200 will be eliminated, and (c) the remaining $97,300 will be exchanged for a five-year, secured note payable paying 13 percent interest.
2. The interest payable will be restructured as follows: elimination of $11,500 of the interest and payment of the remaining $11,500 in cash.
3. The 10 percent, unsecured notes payable will be restructured as follows: (a) $61,200 of them will be eliminated, (b) $11,500 of them will be paid in cash, (c) $243,700 of them will be exchanged for a 5-year, 13 percent secured note, and (d) the remaining $24,600 will be exchanged for 2,460 shares of newly issued common stock having a par value of $10.
4. The preferred shareholders will exchange their stock for 5,030 shares of newly issued $10 par common stock.
5. The common shareholders will exchange their stock for 2,200 shares of newly issued $10 par common stock.

After extensive analysis, the companys reorganization value is determined to be $513,500 prior to any payments of cash required by the reorganization plan. An additional $10,900 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)	$	10,900
Notes payable, 13%, secured		341,000
Common stock ($10 par)		96,900
Postreorganization capital structure	$	448,800

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	$	30,900			$	30,900
Accounts receivable (net)		140,600				111,700
Inventory		25,800				19,000
Property, plant & equipment (net)		445,500				262,100
Total	$	642,800			$	423,700

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 $535,100, which is $524,200 from prepetition payables plus $10,900 in additional accounts payable incurred postpetition.) (Round your percentage answers to nearest whole percentage. Negative amounts should be indicated by a minus sign.)

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.

c. Prepare journal 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.) 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.)