The balance sheet for the LR Corp is presented below. The only asset on balance sheet is in excess of fair market value is inventory, which has a FMV of $60,000. LR is planning to undertake a quasi-reorganization.

A. Explain why a company in LR's position may want to undertake a quasi-reorganization? B. What steps are involved in a quasi-reorganization? C. Present the necessary journal entries?

Cash		30,000
Receivables		55,000
Inventory		70,000
PP&E (net)		175,000
Total Assets		330,000
Liabilities		150,000
Common Stock		100,000
Additional paid-in-capital		220,000
Retained Earnings		(140,000)
Total Liabilities & SE		330,000