A new CEO was hired to revive the floundering Champion Chemical Corporation. The company had endured...

A new CEO was hired to revive the floundering Champion Chemical Corporation. The company had endured operating losses for several years, but confidence was emerging that better times were ahead. The board of directors and shareholders approved a quasi reorganization for the corporation. The reorganization included devaluing inventory for obsolescence by $115 million and increasing land by $5 million. Immediately prior to the restatement, at December 31, 2018, Champion Chemical Corporation’s balance sheet appeared as follows (in condensed form):

CHAMPION CHEMICAL CORPORATION Balance Sheet At December 31, 2018 ($ in millions)
Cash	$	22
Receivables		60
Inventory		270
Land		62
Buildings and equipment (net)		108
	$	522
Liabilities	$	309
Common stock (412 million shares at $1 par)		412
Paid-in capital—excess of par		100
Retained earnings (deficit)		(299	)
	$	522

Required:
1. Prepare the journal entries appropriate to record the quasi reorganization on January 1, 2019.
2. Prepare a balance sheet as it would appear immediately after the restatement.

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Expert Solution

Let me know in case you face any issue: Although format is not provided, but i have used the best format:

ekkarill92 answered 1 year ago

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