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:

Liabilities with priority: Salaries payable $ 22,000 Fully secured creditors: Notes payable (secured by land and buildings valued at $88,000) 60,000 Partially secured creditors: Notes payable (secured by inventory valued at $34,000) 144,000 Unsecured creditors: Notes payable 54,000 Accounts payable 14,000 Accrued expenses 8,000

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 companys 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 salaries 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 Holmess 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.

Assume that all interested parties accept this plan of reorganization and it becomes effective. What journal entries will Holmes Corporation record? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Can anyone help me with 3 and 6?

Thank you

No Transaction General Journal Debit Credit 1 1 79,000 Goodwill Additional paid-in capital 79,000 2 2 22,000 Salary payable Note payable1 year 22,000 3 3 144,000 Notes payable Note payable6 years Common stock Additional paid-in capital Gain on discharge of debt 34,000 72,000 10,000 X 28,000 4 4 Cash 90,000 Additional paid-in capital Common stock 10,000 80,000 4 4 Cash 90,000 00 Additional paid-in capital Common stock 10,000 80,000 5 5 Notes payable Accounts payable Accrued expenses 54,000 14,000 8,000 Cash 15,200 Gain on discharge of debt 60,800 6 6 Gain on discharge of debt Additional paid-in capital Retained earnings