Problem 8 Credit 18,000 The trial balance of Sussex Inc. as at December 31, Year 6, is as follows: Debit Cash $ 45,000 Accounts receivable 95,000 Allowance for doubtful accounts Inventory 150,000 Property, plant, and equipment 540,000 Accumulated depreciation Patents 120,000 Accounts payable Noles payable (10% interest) Accrued interest on notes 12% bonds payable Common stock 19,000 shares) Retained earnings (deficit) 178,000 $1,128,000 210,000 110,000 150,000 40,000 400,000 200,000 $1,128,000 The following reorganization plan has been approved by the shareholders and the creditors: The holders of the notes payable agree to cancel the accrued interest owing to extend the due date, and to reduce the interest rate. In return they will receive a pledge of inventory and receivables as security throughout the life of the notes. Trade creditors agree to accept a payment of $95,000 as full settlement of their claims. The bondholders agree to exchange their bonds for $250,000 in 8% first-mortgage bonds and 15,000 common shares. The deficit is to be eliminated. All parties have agreed that the following reflect the fair values of the individual assets: $ 72,000 2,000 130,000 250,000 190,000 Accounts receivable Allowance for doubtful accounts Inventory Property, plant, and equipment Patents Required: (a) Prepare the journal entries to record the reorganization (b) Prepare a balance sheet after the reorganization