During the recent recession, Polydorous Incorporated accumulated a deficit in retained earnings. Although still operating at a loss, the company posted better results during $20$X$1.$ 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 $ $161,000$

Interest Payable $23,200$

Notes Payable, $10\%,$ unsecured $340,100$

Preferred Stock $100,700$

Common Stock, $$5$ par $150,600$

Retained Earnings $($deficit$)(79,200)$

Total $ $696,400$

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:

The prepetition accounts payable will be restructured according to the following: $($a$)$ $$40,900$ will be paid in cash, $($b$)$ $$21,100$ will be eliminated, and $($c$)$ the remaining $$99,000$ will be exchanged for a four$-$year, secured note payable paying $11$ percent interest.

The interest payable will be restructured as follows: elimination of $$11,600$ of the interest and payment of the remaining $$11,600$ in cash.

The $10$ percent, unsecured notes payable will be restructured as follows: $($a$)$ $$61,600$ of them will be eliminated; $($b$)$ $$11,600$ of them will be paid in cash; $($c$)$ $$241,100$ of them will be exchanged for a $4-$year, $11$ percent secured note; and $($d$)$ the remaining $$25,800$ will be exchanged for $2,580$ shares of newly issued common stock having a par value of $$10.$

The preferred shareholders will exchange their stock for $5,100$ shares of newly issued $$10$ par common stock.

The common shareholders will exchange their stock for $2,180$ shares of newly issued $$10$ par common stock.

After extensive analysis, the company$$s reorganization value is determined to be $$514,300$ 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, $11\%,$ secured $340,100$

Common stock $($$$10$ par$)98,600$

Postreorganization capital structure $ $450,200$

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 $ $30,400$ $ $30,400$

Accounts receivable $($net$)141,600111,700$

Inventory $26,50018,300$

Property, plant and equipment $($net$)445,300262,100$

Total $ $643,800$ $ $422,500$

Required:Complete this question by entering your answers in the tabs below.

Required C

Prepare journal entries for execution of the plan of reorganization with its general restructuring of debt and capital.

Note: If no entry is required for a transaction$/$event$,$ select $"$No joumal entry required" in the first account field.

A Record the debt discharge.

a Record the exchange of stock for stock.

c$.$ Record the fresh start accounting and the elimination of

the deficit.

Note : $=$ journal entry has been entered

Prepare journal entries for execution of the plan of reorganization with its general restructuring of debt and capital.