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The balance sheet for the LR Corporation is present below.The only asset on the balance sheet which is in excess of fair market value is

The balance sheet for the LR Corporation is present below.The only asset on the balance sheet which is in excess of fair market value is inventory, which has a fair market value 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.

image text in transcribed
Cash 30,000 Receivables 55,000 Inventory 70,000 PP&E (net) 175,000 330,000 Liabilities 150,000 Common stock 100,000 Additional paid in capital 220,000 Retained earnings (140,000) 330,000

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