Problem - Jetson Corp. has incurred losses for several years. The BOD voted to implement a quasi-reorganization. The balance sheet prior to the quasi-reorganization follows: Note: Fair Value of inventory is $250 million and PP&E FV is $100 million.
Required: Prepare the journal entries and prepare a new balance sheet.
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(In millions $US)
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Cash
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$100
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Receivable
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200
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Inventory
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500
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PP&E
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200
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Total Assets
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$1,000
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Liabilities
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$200
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Common stock (900 million paid shares; $1 par)
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900
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Additional-paid in capital
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200
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Retained earnings (deficit)
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(300)
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Total liabilities
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$1,000
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