Page 132 - Bankruptcy Volume 1

Amount Amount
Debit Credit
Common stock, $1 par value (900)
Additional paid-in capital (26,100)
Gain due to debt discharge (8,000)
$ — $ —

Entry Two

The entry to record the cancellation of the old equity and the issuance of new equity is as follows (in thou-
sands):

Amount Amount
Debit Credit
Common stock (old issue) $ 3,500
Common stock (new issue $1 par) $ (100)
Additional paid-in capital on new issue (2,900)
Additional paid-in capital due to stock (500)
exchange
$ — $ —

Entry Three

The entry to record the adoption of fresh-start reporting is as follows:

Amount Amount
Debit Credit
Additional paid-in capital due to stock $ 500
exchange
Gain due to debt discharge 8,000
Inventory 2,000
Property, plant, and equipment (net) 1,000
Trademarks 10,000
Goodwill 2,700

Other current assets $
(4,600)
Related party advances and other (8,000)
Retained earnings (deficit) (11,600)

$ — $ —

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