The plan of reorganizing for Taylor Companies, Inc., was approved by the court, stockholders, and creditors on December 31, 20X1. The plan calls for a general restructuring of all of Taylor's debt. The company's liability and capital accounts on December 31, 20X1. are as follows: $ 30,600 Accounts Payable (postpetition) Liabilities Subject to compromise: Accounts Payable Notes Payable, 10%, unsecured Interest Payable Bonds Payable, 10% Common Stock, $i par Additional Paid-In Capital Retained Earnings (deficit) Total 81,809 151,209 37,500 28e, eee 181. eee 201. eee (179,500) 622,899 A total of $30.600 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: 1. The accounts payable creditors existing at the date the petition was filed agree to accept $72.900 of net accounts receivable in full settlement of their claims. 2. The holders of the 10 percent notes payable of $151,200 plus $17.500 of interest payable agree to accept land having a fair value of $127.008 and a book value of $85.900. 3. The holders of the 10 percent bonds payable of $200.000 plus $20,000 of interest payable agree to cancel accrued interest of $15.000. accept cash payment of the remaining $5,000 of interest, and accept a secured interest in the company's equipment in exchange for extending the term of the bonds for an additional year at no interest. 4. The common shareholders agree to reduce the deficit by changing the stock's 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. Required: a. Prepare a recovery analysis for the plan of reorganization, concluding with the total recovery of each liability and capital component of Taylor Companies. (Amounts to be deducted should be Indicated with minus slgn.) TAYLOR COMPANIES, INC. Plan of Reorganization Recovery Analysis December 31, 20X1 Recovery Common Stock Total Recovery Pre- Confirmation Elimination of Debt and Equity Surviving Debt Reduction of Taylor's Assets Value $ Post-petition liabilities Claims/Interest: Accounts Payable Notes Payable Related Interest Payable Bonds Payable Related Interest Payable Total Common shareholders Common Stock Additional Paid-In Capital Retained Earnings Deficit Total b. Prepare the journal entries to account for the discharge of the debt and the restructuring of the common equity in fulfillment of the plan of reorganization. (If no entry is requlred for a transaction/event, select "No Journal entry required" In the first account field.) View transaction list Journal entry worksheet Record the discharge of debt. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal The plan of reorganizing for Taylor Companies, Inc., was approved by the court, stockholders, and creditors on December 31, 20X1. The plan calls for a general restructuring of all of Taylor's debt. The company's liability and capital accounts on December 31, 20X1. are as follows: $ 30,600 Accounts Payable (postpetition) Liabilities Subject to compromise: Accounts Payable Notes Payable, 10%, unsecured Interest Payable Bonds Payable, 10% Common Stock, $i par Additional Paid-In Capital Retained Earnings (deficit) Total 81,809 151,209 37,500 28e, eee 181. eee 201. eee (179,500) 622,899 A total of $30.600 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: 1. The accounts payable creditors existing at the date the petition was filed agree to accept $72.900 of net accounts receivable in full settlement of their claims. 2. The holders of the 10 percent notes payable of $151,200 plus $17.500 of interest payable agree to accept land having a fair value of $127.008 and a book value of $85.900. 3. The holders of the 10 percent bonds payable of $200.000 plus $20,000 of interest payable agree to cancel accrued interest of $15.000. accept cash payment of the remaining $5,000 of interest, and accept a secured interest in the company's equipment in exchange for extending the term of the bonds for an additional year at no interest. 4. The common shareholders agree to reduce the deficit by changing the stock's 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. Required: a. Prepare a recovery analysis for the plan of reorganization, concluding with the total recovery of each liability and capital component of Taylor Companies. (Amounts to be deducted should be Indicated with minus slgn.) TAYLOR COMPANIES, INC. Plan of Reorganization Recovery Analysis December 31, 20X1 Recovery Common Stock Total Recovery Pre- Confirmation Elimination of Debt and Equity Surviving Debt Reduction of Taylor's Assets Value $ Post-petition liabilities Claims/Interest: Accounts Payable Notes Payable Related Interest Payable Bonds Payable Related Interest Payable Total Common shareholders Common Stock Additional Paid-In Capital Retained Earnings Deficit Total b. Prepare the journal entries to account for the discharge of the debt and the restructuring of the common equity in fulfillment of the plan of reorganization. (If no entry is requlred for a transaction/event, select "No Journal entry required" In the first account field.) View transaction list Journal entry worksheet Record the discharge of debt. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal