Problem 8 The trial balance of Sussex Inc. as at December 31, Year 6, is as follows: Debil Credit Cash $ 45,000 Accounts receivable 95,000 Allowance for doubtful accounts 18,000 Inventory 150,000 Property, plant, and equipment 540,000 Accumulated depreciation 210,000 Patents 120,000 Accounts payable 110,000 Notes payable (10% interest 150,000 Accrued interest on notes 40.000 12% bonds payable 400,000 Common stock 19,000 shares 200,000 Retoined earnings (deficit 178,000 $1,128,000 $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 partics have agreed that the following reflect the fair values of the individual assets: Accounts receivable $72,000 Allowance for doubtful accounts 2,000 Inventory Property, plant, and equipment 250,000 Patents 190,000 Required: (a) Prepare the journal entries to record the reorganization. (b) Prepare a balance sheet after the reorganization 130,000