Problemmighty contractors has been experiencing financial, Ask an Expert

Accounting

Problem

Mighty Contractors has been experiencing financial difficulties since start up. The following are the ledger balances on December 31, 2016:

Common shares (40,000 shares authorized and outstanding) $560,000

Retained Earnings (Deficit) (320,000)

On January 2, 2017, the company's shareholders agreed to a financial reorganization whereby there was a transfer ownership of the shares to the creditors in full payment of the $450,000 notes payable. At the time the building was on the books at $275,000 and it was determined that the market value was $380,000. Equipment was on the books at $85,000 but the appraised value was $65,000.

Required:

Prepare the journal entries for the financial reorganization of Mighty Contractors.

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Auditing, Accounting

Category:- Auditing
Reference No.:- M92753256

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