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Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discounting the anticipated future cash flows):

	Book Value		Fair Value
Accounts receivable	$	23,200	$	21,200
Inventory		159,000		127,000
Land and buildings		272,000		300,000
Machinery		161,000		138,000
Patents		134,000		159,000

The company has a reorganization value of $838,000.

Smith has 52,000 shares of $10 par value common stock outstanding. A deficit Retained Earnings balance of $699,000 also is reported. The owners will distribute 36,100 shares of this stock as part of the reorganization plan.

The companys liabilities will be settled as follows:

Accounts payable of $194,000 (existing at the date on which the order for relief was granted) will be settled with an 8 percent, two-year note for $36,400.

Accounts payable of $98,300 (incurred since the date on which the order for relief was granted) will be paid in the regular course of business.

Note payableFirst Metropolitan Bank of $215,000 will be settled with an 8 percent, five-year note for $52,100 and 18,300 shares of the stock contributed by the owners.

Note payableNorthwestern Bank of Tulsa of $375,000 will be settled with a 7 percent, eight-year note for $115,000 and 18,300 shares of the stock contributed by the owners.

b. Prepare a balance sheet for Smith Corporation upon its emergence from reorganization.

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