Question

In: Accounting

Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on...

Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discounting the anticipated future cash flows): Book Value Fair Value Accounts receivable $ 23,200 $ 21,200 Inventory 159,000 127,000 Land and buildings 272,000 300,000 Machinery 161,000 138,000 Patents 134,000 159,000 The company has a reorganization value of $838,000. Smith has 52,000 shares of $10 par value common stock outstanding. A deficit Retained Earnings balance of $699,000 also is reported. The owners will distribute 36,100 shares of this stock as part of the reorganization plan. The company’s liabilities will be settled as follows: Accounts payable of $194,000 (existing at the date on which the order for relief was granted) will be settled with an 8 percent, two-year note for $36,400. Accounts payable of $98,300 (incurred since the date on which the order for relief was granted) will be paid in the regular course of business. Note payable—First Metropolitan Bank of $215,000 will be settled with an 8 percent, five-year note for $52,100 and 18,300 shares of the stock contributed by the owners. Note payable—Northwestern Bank of Tulsa of $375,000 will be settled with a 7 percent, eight-year note for $115,000 and 18,300 shares of the stock contributed by the owners. b. Prepare a balance sheet for Smith Corporation upon its emergence from reorganization. This is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.Next Visit question mapQuestion 1 of 1 Total 1 of 1 Prev

Solutions

Expert Solution

Balance sheet for Smith Corporation upon its emergence from reorganization
Assets
Current Assets:
Accounts receivables $21,200
Inventory $127,000
Total Current Assets $148,200
Fixed Assets:
Land and buildings $300,000
Machinery $138,000
Total Fixed Assets $438,000
Intangible Assets:
Patents $159,000
Reorganization value in excess of amount allocable to identifiable assets $92,800
Total Assets $838,000
Liabilities and Stockholder's equity
Liabilities
Current Liabilities:
Accounts payable $98,300
Long term Liabilities:
Notes Payable-2 years 8% $36,400
Notes Payable-5 years 8% $52,100
Notes Payable-8 years 7% $115,000
Stockholders' Equity
Common Stock (52000 x $10 each) $520,000
Additional paid in capital (balancing figure) $16,200
Retained Earnings $0
Total Stock holders' equity $536,200
Total Liabilities and Stockholder's equity $838,000

Related Solutions

Weihong Corporation is about to emerge from a Chapter 11 reorganization. Assets of the emerging entity...
Weihong Corporation is about to emerge from a Chapter 11 reorganization. Assets of the emerging entity have a total book value of $3,000,000. Of these, assets with a book value of $600,000 are not needed to operate the emerging entity and will be sold for an expected price of $460,000. The remaining assets will be used in operations. Operations are expected to generate an annual net cash flow of $350,000. This amount is projected for the next five years; a...
An S corporation is considered a flow-through business entity that has the advantages of both the...
An S corporation is considered a flow-through business entity that has the advantages of both the corporation and proprietorship. Discuss the general rules that govern S corporations. What are some of the operational rules that effect various code provisions on S corporations? Go to www.irs.gov (Links to an external site.)Links to an external site. and provide a synopsis of the similarities and differences between S corporations and one other form of business.
Addison Corporation is currently going through a Chapter 11 bankruptcy. The company has the following account...
Addison Corporation is currently going through a Chapter 11 bankruptcy. The company has the following account balances for the current year.    Debit Credit   Advertising expense $ 39,000   Cost of goods sold 226,000   Depreciation expense 37,000   Interest expense 3,000   Interest revenue $ 37,000   Loss on closing of branch 124,000   Professional fees 86,000   Rent expense 31,000   Revenues 572,000   Salaries expense 85,000    Prepare an income statement for this organization. The effective tax rate is 30 percent (realization of any tax benefits...
Over the past few decades, Disney has gone through both horizontal and vertical integration through a...
Over the past few decades, Disney has gone through both horizontal and vertical integration through a number of horizontal and vertical mergers. What are these mergers? What does Disney’s business include? What are the pros and cons being so integrated?
1. Explain a flow-through entity. How many times is flow-through entity income taxed, who pays the...
1. Explain a flow-through entity. How many times is flow-through entity income taxed, who pays the tax, and what is the tax rate. 2. Discuss corporate taxable income and the concept of double-taxation. Who pays the first level and at what tax rate? Who pays the second level of tax and at what tax rate?
The SAT has gone through many revisions over the years. People argue that female students generally...
The SAT has gone through many revisions over the years. People argue that female students generally do worse on math tests but better on writing tests. Consider the following portion of data on 20 students who took the SAT test last year. Information includes each student’s score on the writing and math sections of the exam, the student’s GPA, and a Female dummy variable that equals 1 if the student is female, 0 otherwise. Writing Math GPA Gender 620 600...
The Malaysian economy has gone through structural transformation, explain the transformation steps of Malaysian economy from...
The Malaysian economy has gone through structural transformation, explain the transformation steps of Malaysian economy from being agricultural economy to manufacturing as the engine of economic growth and to the service sector as the engine of economic growth in terms of macroeconomic variable conurbation of every sector to the Gross Demotic Product (GDP), employment generation exports and valued added.
Mercury has likely gone through many stages of atmospheric development since its formation. Match the stage...
Mercury has likely gone through many stages of atmospheric development since its formation. Match the stage of atmosphere development in the timeline below. First: "A secondary atmosphere of carbon dioxide and methane form with the planet", "A primary atmosphere of carbon dioxide and methane form with the planet", "A primary atmosphere of hydrogen and helium forms as the planet forms", "A rocky planet forms with no atmosphere"    Second: "The primary atmosphere is blown away by the energy of the...
I have a project to do, but I have gone through kaggle to look for the...
I have a project to do, but I have gone through kaggle to look for the datset. Kindly help me for a dataset that I can do all these processes: 1. Data Cleaning, 2. Data exploration 3. Principal component analysis 4. Multiple linear regression 5. Predictive Analsysis using MSE, Lasso, ridge, and AIC and BIC test KNE model ETC. please help me with the dataset. I will do the work for myself. The dataset can either be on economy, health,...
Specify the causes of the Lehman bankruptcy and insolvency as the firm moved through time.
Specify the causes of the Lehman bankruptcy and insolvency as the firm moved through time.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT