Supplemental Problem 15-4 Quasi Reorganization Davis Corporation has incurred losses from operations for several years. At the recommendation of the newly hired president, the board of directors voted to implement a quasi-reorganization, subject to stockholder approval. Immediately prior to the restatement, on June 30, Davis's balance sheet was as follows: Current assets 550,000 Property, plant, and equipment (net) 1,350,000 Other assets 200,000 $2,100,000 Total liabilities 600,000 Common stock ($10 par, 160,000 shares) 1,600,000 Additional paid-in capital 300,000 Retained earnings (deficit) (400,000) $2,100,000

The stockholders approved the quasi-reorganization effective July 1. It was determined that Other Assets had a fair value of $50,000 and Property, Plant, and Equipment (net) a fair value of $1,000,000.

Required: Make the necessary journal entries to complete the quasi-organization, adjusting the capital structure as necessary but without a stockholder assessment