Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discounting the anticipated future cash flows):

	Book Value		Fair Value
Accounts receivable	$	20,000	$	18,000
Inventory		143,000		111,000
Land and buildings		250,000		278,000
Machinery		144,000		121,000
Patents		100,000		125,000

The company has a reorganization value of $800,000.

Smith has 50,000 shares of $10 par value common stock outstanding. A deficit Retained Earnings balance of $670,000 also is reported. The owners will distribute 30,000 shares of this stock as part of the reorganization plan.

The companys liabilities will be settled as follows:

• Accounts payable of $180,000 (existing at the date on which the order for relief was granted) will be settled with an 8 percent, two-year note for $35,000.
• Accounts payable of $97,000 (incurred since the date on which the order for relief was granted) will be paid in the regular course of business.
• Note payableFirst Metropolitan Bank of $200,000 will be settled with an 8 percent, five-year note for $50,000 and 15,000 shares of the stock contributed by the owners.
• Note payableNorthwestern Bank of Tulsa of $350,000 will be settled with a 7 percent, eight-year note for $100,000 and 15,000 shares of the stock contributed by the owners.

b. Prepare a balance sheet for Smith Corporation upon its emergence from reorganization.