Use the following information for Questions 38 – 40:

Hopeful Company’s balance sheet is as follows:

Hopeful Company

Balance Sheet, pre-quasi-reorganization

Assets

Liabilities and Equity

Cash

$ 60,000

Loans payable

$1,220,000

Inventories

550,000

Common stock, $10 par

550,000

Property (net)

950,000

Additional paid-in capital

400,000



Retained earnings

(610,000)

Total

$1,560,000

Total

$1,560,000

The company enters into a quasi-reorganization. Pursuant to this plan, inventories are written down by $50,000 and property is reduced by $180,000. The par value of the common stock is reduced to $2/share.

38. After the quasi-reorganization, total assets are reported at:

a. $1,560,000

b. $1,790,000

c. $1,330,000

d. $1,270,000

39. At the completion of the quasi-reorganization process, the balance in additional paid-in capital is:

a. $230,000

b. $0

c. $400,000

d. $ 55,000

40. At the completion of the quasi-reorganization process, the balance in the common stock, $2 par account is:

a. $550,000

b. $440,000

c. $ 55,000

d. $110,000