| | Exercise 15-20 The condensed balance sheets of Monty Limited, a small private company that follows ASPE, follow for the periods immediately before, and one year after, it had completed a financial reorganization: | | | Before Reorganization | | One Year After | | | | Before Reorganization | | One Year After | | Current assets | | | $450,000 | | | $570,000 | | Common shares | | | $2,850,000 | | | $1,550,000 | | Buildings (net) | | | 2,000,000 | | | 1,146,000 | | Contributed surplus | | | 210,000 | | | | | | | | | | | | | (Deficit) retained earnings | | | (610,000 | ) | | 166,000 | | | | | $2,450,000 | | | $1,716,000 | | | | | $2,450,000 | | | $1,716,000 | For the year following the financial reorganization, the company reported net income of $194,000 and depreciation expense of $74,000, and paid a cash dividend of $28,000. As part of the reorganization, the company wrote down inventory by $120,000 in order to reflect circumstances that existed before the reorganization. Also, the deficit, and any revaluation adjustment, was accounted for by charging amounts against contributed surplus until it was eliminated, with any remaining amount being charged against common shares. The common shares are widely held and there is no controlling interest. No purchases or sales of plant assets and no share transactions occurred in the year following the reorganization. Prepare all the journal entries made at the time of the reorganization. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) | Account Titles and Explanation | Debit | Credit | | enter an account title to record impairment of assets that existed before reorganization | enter a debit amount | enter a credit amount | | enter an account title to record impairment of assets that existed before reorganization | enter a debit amount | enter a credit amount | | enter an account title to record impairment of assets that existed before reorganization | enter a debit amount | enter a credit amount | | (To record impairment of assets that existed before reorganization) | | | | enter an account title to eliminate deficit | enter a debit amount | enter a credit amount | | enter an account title to eliminate deficit | enter a debit amount | enter a credit amount | | enter an account title to eliminate deficit | enter a debit amount | enter a credit amount | | (To eliminate deficit) | | | | | | | | | Question Attempts: 0 of 5 used | | SAVE FOR LATER | SUBMIT ANSWER | | | | |
