On September 30, 2014, SRP Company filed a petition for reorganization with a bankruptcy court The plan was approved by the court and all parties of interest on January 2, 2015, when SRP Companys balance sheet was as follows SRP Company Balance Sheet January 2, 2015 Cash $32,500 Accounts Receivable $69,300 Less Allowance for Uncollectibles 18,300 51,000 Inventory 132,300 Property and Equipment 302,900 Less Accumulated Depreciation 168,800 134,100 Land 21,300 Patents 83,000 Total Assets $454,200 Current Liabilities Accounts PayableUnsecured $147,200 12 Notes PayableUnsecured 61,000 Accrued Wageswith Priority 11,600 Interest Payable 39,400 Total Current Liabilities 259,200 10 Note PayableUnsecured 51,200 9 Mortgage PayableSecured by Equipment 80,000 Stockholders Equity Common Stock, $ 50 par value, 2,500,000 Shares Authorized, 489,000 shares issued and Outstanding 244,500 Retained Earnings (deficit) (180,700 ) Total Equities $454,200 The terms of the reorganization plan are as follows 1 Creditors represented by $68,000 of the unsecured accounts payable agree to accept the accounts receivable of SRP Company in full settlement of their claims The fair value of the receivables is $48,000 2 Creditors represented by $57,000 of the unsecured accounts payable agree to accept a patent with a book value of $43,000 and a fair value of $50,000 in full settlement of their claims 3 Creditors of the remaining unsecured accounts payable agree to accept $0 60 on the dollar Cash is paid to these creditors and to the creditors with priority 4 The creditor holding the 12 , $61,000 note (on which there is $6,400 accrued interest) agreed to extend the due date for two years from January 3, 2015, and to reduce the interest rate to 6 on the current carrying value of the debt ($67,400), payable annually 5 The holder of the 10 , $51,200 unsecured note (on which there is $11,500 accrued interest) agreed to cancel the accrued interest and $15,100 of the principal interest on the new note at 10 is due annually, with the principal due on January 3, 2018 6 The holder of the 9 , $80,000 mortgage note (on which there is $21,500 accrued interest) agreed to accept 100,000 shares of common stock in exchange for full satisfaction of the debt The common stock has a fair value of $0 61 per share 7 The par value of the common stock is reduced to $ 10 per share and any remaining accumulated deficit is eliminated A Prepare journal entries to give effect to the reorganization (Credit account titles are automatically indented when 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 ) This question also has 2 more parts to answer (B, C) buy the system is not revealing it until one answers to part (A)

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On September 30, 2014, SRP Company filed a petition for reorganization with a bankruptcy court. The plan was approved by the court and all parties

On September 30, 2014, SRP Company filed a petition for reorganization with a bankruptcy court. The plan was approved by the court and all parties of interest on January 2, 2015, when SRP Companys balance sheet was as follows:

SRP Company Balance Sheet January 2, 2015
Cash		$32,500
Accounts Receivable	$69,300
Less: Allowance for Uncollectibles	18,300	51,000
Inventory		132,300
Property and Equipment	302,900
Less: Accumulated Depreciation	168,800	134,100
Land		21,300
Patents		83,000
Total Assets		$454,200
Current Liabilities
Accounts PayableUnsecured		$147,200
12% Notes PayableUnsecured		61,000
Accrued Wageswith Priority		11,600
Interest Payable		39,400
Total Current Liabilities		259,200
10% Note PayableUnsecured		51,200
9% Mortgage PayableSecured by Equipment		80,000
Stockholders Equity
Common Stock, $.50 par value, 2,500,000
Shares Authorized, 489,000 shares issued and Outstanding		244,500
Retained Earnings (deficit)		(180,700	)
Total Equities		$454,200

The terms of the reorganization plan are as follows:

1.		Creditors represented by $68,000 of the unsecured accounts payable agree to accept the accounts receivable of SRP Company in full settlement of their claims. The fair value of the receivables is $48,000.
2.		Creditors represented by $57,000 of the unsecured accounts payable agree to accept a patent with a book value of $43,000 and a fair value of $50,000 in full settlement of their claims.
3.		Creditors of the remaining unsecured accounts payable agree to accept $0.60 on the dollar. Cash is paid to these creditors and to the creditors with priority.
4.		The creditor holding the 12%, $61,000 note (on which there is $6,400 accrued interest) agreed to extend the due date for two years from January 3, 2015, and to reduce the interest rate to 6% on the current carrying value of the debt ($67,400), payable annually.
5.		The holder of the 10%, $51,200 unsecured note (on which there is $11,500 accrued interest) agreed to cancel the accrued interest and $15,100 of the principal; interest on the new note at 10% is due annually, with the principal due on January 3, 2018.
6.		The holder of the 9%, $80,000 mortgage note (on which there is $21,500 accrued interest) agreed to accept 100,000 shares of common stock in exchange for full satisfaction of the debt. The common stock has a fair value of $0.61 per share.
7.		The par value of the common stock is reduced to $.10 per share and any remaining accumulated deficit is eliminated.

A- Prepare journal entries to give effect to the reorganization. (Credit account titles are automatically indented when 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.)

This question also has 2 more parts to answer (B, C) buy the system is not revealing it until one answers to part (A)