Solved by verified expert :Problem 13-36 [LO9]Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2013. The company currently has 40,000 shares of common stock outstanding with a $320,000 par value. As part of the reorganization, the owners will contribute 26,000 shares of this stock back to the company. A retained earnings deficit balance of $471,000 exists at the time of this reorganization. The company has the following asset accounts: Book Value Fair Value Accounts receivable $ 100,000 $ 55,000 Inventory 112,000 100,000 Land and buildings 601,000 650,000 Equipment 57,000 42,000 ________________________________________ The company’s liabilities will be settled as follows. Assume that all notes will be issued at reasonable interest rates. • Accounts payable of $90,000 will be settled with a note for $7,000. These creditors will also get 1,000 shares of the stock contributed by the owners.• Accrued expenses of $45,000 will be settled with a note for $6,000.• Note payable of $110,000 (due 2017) was fully secured and has not been renegotiated.• Note payable of $285,000 (due 2016) will be settled with a note for $60,000 and 14,000 shares of the stock contributed by the owners.• Note payable of $255,000 (due 2014) will be settled with a note for $81,000 and 11,000 shares of the stock contributed by the owners.• Note payable of $236,000 (due 2015) will be settled with a note for $120,000. The company has a reorganization value of $944,000. Prepare all journal entries for Ristoni so that the company can emerge from the bankruptcy proceeding. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
