The Larisa Company is coming out of reorganization with the following accounts:

	Book Value		Fair Value
Receivables	$	95,000	$	120,000
Inventory		215,000		240,000
Buildings		315,000		430,000
Liabilities		315,000		315,000
Common stock		345,000
Additional paid-in capital		50,000
Retained earnings (deficit)		(85,000)

The company's assets have a $835,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors.

Prepare the journal entry that is necessary to adjust the company's records to fresh start accounting. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

Record the assets and liabilities after reconstruction.

Transaction

General Journal

Debit

Credit

1

*Enter debits before credits