Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 13

Recording restructuring transactions. St. John Corporation is barely solvent and has been seeking an equity investor that would be interested in making a capital contribution so that the company would hopefully return to performance levels it had experienced in the past. The company's year-end 2015 balance sheet is presented below.
Selected transactions occurring during the first six months of 2016 were as follows:
a. Patents with a fair value of $230,000 were transferred to the officer in partial satisfaction of their note. The remaining balance on the note would be paid over five quarters with the first payment of $35,026.77 due on June 30, 2016.
b. The mortgage payable was restructured with 40 quarterly payments of $51,178.05, beginning on June 30, 2016, in addition to an immediate lump sum payment of $100,000.
c. The bank A note payable was restructured as follows: the development land with a net realizable value of $980,000 was conveyed along with marketable securities having a book value of $80,000 and a market value of $95,000. The balance of the note was to be over 10 quarters with payments of $111,145.03 beginning on June 30, 2016.
d. The bank B note payable was partially secured by equipment which had a book value of $240,000 and a net realizable value of $220,000. The equipment was seized by the bank and the company agreed to settle the balance of the note by making 10 quarterly payments of $55,000 beginning on June 30, 2016.
e. On June 30, 2016 all payments required by item (a) through (d) above were paid.
f. Common shareholders approved a reduction in par value from $10 per share to $5 per share and the deficit was eliminated.
Prepare all necessary entries to record the above transactions (a) through (f ).