The plan of reorganizing for Sualihu Companies, Inc., was approved by the court, stockholders, and creditors on December 31, 20X1. The plan calls for a general restructuring of all of Sualihus debt. The companys liability and capital accounts on December 31, 20X1, are as follows:

Accounts payable (postpetition)	$30,000
Liabilities subject to compromise:
Accounts payable	80,000
Notes payable, 10%, unsecured	150,000
Interest payable	40,000
Bonds payable, 12%	200,000
Common stock, $1 par	100,000
Additional Paid-In Capital	200,000
Retained Earnings (deficit)	(178,000)
Total	$622,000

A total of $30,000 of accounts payable has been incurred since the company filed its petition for relief under Chapter 11. No other liabilities have been incurred since the petition was filed. No payments have been made on the liabilities subject to the compromise that existed on the petition date. Under the terms of the reorganization plan:

The accounts payable creditors existing at the date the petition was filed agree to accept $76,000 of net accounts receivable in full settlement of their claims.

The holders of the 10% notes payable of $150,000 plus $16,000 of interest payable agree to accept land having a fair value of $125,000 and a book value of $95,000.

The holders of the 12% bonds payable of $200,000 plus $24,000 of interest payable agree to cancel accrued interest of $18,000, accept cash payment of the remaining $6,000 of interest, and accept a secured interest in the companys equipment in exchange for extending the term of the bonds for an additional year at no interest.

The common shareholders agree to reduce the deficit by changing the stocks par value to $2 per share and eliminating any remaining deficit after recognition of all gains or losses from the debt restructuring transactions specified in the plan of reorganization. The deficit will be eliminated by reducing additional paid-in capital.

Under Clause [b], Sualihu Companies Inc. will record a gain of...

		25,000
		16,000
		125,000
		41,000