Following Is the Balance Sheet of Tontoe Corporation on July

question 5

Essay

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.

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