Holmes Corporation files a voluntary petition with the bankruptcy court in hopes of reorganizing. Company officials prepare a statement of financial affairs showing these debts: $ 22,00 60, cee Liabilities with priority: Salaries payable Fully secured creditors: Notes payable (secured by land and buildings valued at $88,280) Partially secured creditors: Notes payable (secured by inventory valued at $34, eee) Unsecured creditors: Notes payable Accounts payable Accrued expenses 144, eee 54,00 14, eee 8, eee Holmes has 11,000 shares of common stock outstanding with a par value of $8 per share. In addition, the company currently reports a deficit balance of $85,000. . In hopes of emerging from Chapter 11 bankruptcy, officials propose the following reorganization plan: The company's assets have a total book value of $305,000, an amount considered to be equal to fair value. The reorganization value of business assets as a whole is set at $384,000. Employees will receive a one-year note in lieu of all salarles owed. Interest will be paid at a 9 percent annual rate, a normal rate for this type of liability Future Interest on the fully secured note will drop from a 14 percent annual rate, which is now unrealistic, to a 9 percent rate. The company will issue a new six-year $34,000 note paying 9 percent annual Interest to replace the partially secured note payable. In addition, this creditor will receive 9,000 new shares of Holmes's common stock. An outside Investor will buy 10,000 new shares of common stock at $9 per share. The unsecured creditors will receive an offer of 20 cents on the dollar to settle the remaining liabilities. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 1 1 79.000 Goodwill Additional paid-in capital 79.000 2 2 22.000 Salary payable Note payable-1 year 22.000 3 3 144,000 Notes payable Note payable6 years 34,000 72,000 Common stock Additional paid-in capital Gain on discharge of debt 4 4 90.000 Cash Additional paid-in capital Common stock 10.000 80.000 5 5 54,000 Notes payable Accounts payable Accrued expenses 14,000 8.000 Cash 15,200 60.800 Gain on discharge of debt 6 6 Gain on discharge of debt Additional paid-in capital Retained earnings