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 $ 22,400 $ 20,400 Inventory 155,000 123,000 Land and buildings 268,000 296,000 Machinery 157,000 134,000 Patents 130,000 155,000

The company has a reorganization value of $834,000.

Smith has 51,000 shares of $10 par value common stock outstanding. A deficit Retained Earnings balance of $695,000 also is reported. The owners will distribute 35,700 shares of this stock as part of the reorganization plan.

The companys liabilities will be settled as follows:

Accounts payable of $190,000 (existing at the date on which the order for relief was granted) will be settled with an 8 percent, two-year note for $36,000. Accounts payable of $97,900 (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 $211,000 will be settled with an 8 percent, five-year note for $51,700 and 17,900 shares of the stock contributed by the owners. Note payableNorthwestern Bank of Tulsa of $371,000 will be settled with a 7 percent, eight-year note for $111,000 and 17,900 shares of the stock contributed by the owners.

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