Question
In: Accounting
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.
Solutions
Expert Solution
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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 agoRelated Solutions
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 $106 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...
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