Following is the balance sheet of Tontoe Corporation on July 1, 20X5, just prior to obtaining the required stockholder approval to undergo a quasi-reorganization:
Required:
Prepare the journal entries necessary to record the following items that were part of the quasi-reorganization:
a.
Inventory is to be reduced to its fair market value of $90,000.
b.
The plant and equipment is to be revalued to $70,000 through the Accumulated Depreciation account.
c.
Par value of the stock is reduced to $1 per share and the deficit is eliminated.

Question

Following is the balance sheet of Tontoe Corporation on July 1, 20X5, just prior to obtaining the required stockholder approval to undergo a quasi-reorganization:
  Required:
Prepare the journal entries necessary to record the following items that were part of the quasi-reorganization: 
a.
Inventory is to be reduced to its fair market value of $90,000.
b.
The plant and equipment is to be revalued to $70,000 through the Accumulated Depreciation account.
c.
Par value of the stock is reduced to $1 per share and the deficit is eliminated.

Quizplus · Accepted Answer

The Answer of Following is the balance sheet of Tontoe Corporation on July 1, 20X5, just prior to obtaining the required stockholder approval to undergo a quasi-reorganization:
  Required:
Prepare the journal entries necessary to record the following items that were part of the quasi-reorganization: 
a.
Inventory is to be reduced to its fair market value of $90,000.
b.
The plant and equipment is to be revalued to $70,000 through the Accumulated Depreciation account.
c.
Par value of the stock is reduced to $1 per share and the deficit is eliminated.

Following Is the Balance Sheet of Tontoe Corporation on July