I need help solving P16-25 question

mazonawsnmm (' PIS-26 PIS25 Quasi-Reorganiution (Appendix) The Moore Corporation experienced several years or operating losses and encountered serious nancial difculties, resulting in liquidity problems and a decit in retained enrninge 1898121 However, recent entry into several new markets has been encouraging. The board of directors, with its stock- holders' consent, decides to complete a quasi-reorganization on December 31, 2004 The balance sheet, prior to any adjustments, is shown below: Cash 3 6,000 Accounts payable 5 51,000 Accounts receivable 18,000 Accrued liabilities 7,000 Inventories 42,000 Bonds payable (due 1/1/2008) 84,000 Invesunens in M Company bonds 66,000 Common stock, 510 par 100,000 Property and equipment 193,000 Additional paid-in capital 32,000 Les: Accumulated depreciation (71,000) Retained earning: (41,000) Patents (net) M Total Assets $283,000 Total Liabilities and Stockholders' Equity $283,000 4. 5. On December 31, 2004, an examination of the company aecounu discloses the following information: 1. 2. 3. Some $3,000 of the current accounts receivable are estimated to be uncollecnhle. The inventories consist of several obsolete items. An analysis places the fair value of the inventory at 530,000. The M Company bonds had been purchased in November 2004. They are being held to maturity and have a current market value of $60,000. The appraisal value of the property and equipment is $100,000. Several obsolete patents are being carried on the books at a carrying value of $3,000 In addition, on December 31, 2004, approval is received to reduce the par value of the common stock to $5 per share. During 2005, the company discovers additional obsolete invmtory with no resale value. This inventory had been carried on the books since 2001 at a cost of $4,000. It is determined that the inventory had become obsolete during 20% Required 1. Z. 3. Prepare the journal entries to complete the quasi-reorganization. Prepare the revised balance sheet on December 31, 2004, including an appropriate note to the nancial statements. Prepare the ioumal entry in 1005 to account for the obsolete inventoryi Quasi-Reorganization (Appendix) FAHRS Corporation has experienced losses in uch oi the last three years. A reorganization of top management has taken place and the new chief executive otoer is condent the come pany can be saved from bankruptcy. A quasi-reorganization has been proposed contingent upon stockholder approval. Prior to the reorganization, the December 31, 2004 balance sheet reflects the following amounts: e Incognlta