The Larisa Company is exiting bankruptcy reorganization with the following accounts:

	Book Value			Fair Value
Receivables	$	105,000		$	140,000
Inventory		225,000			260,000
Buildings		325,000			450,000
Liabilities		325,000			325,000
Common stock		355,000
Additional paid-in capital		70,000
Retained earnings (deficit)		(95,000	)

The company's assets have a $875,000 reorganization value. As part of the reorganization, the company's owners transferred 75 percent of the outstanding stock to the creditors.

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

1)Record the entry to adjust asset values to fair value

2) Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.

Please show step by step on how to get to the solution, thank you