Zoyhofski Corporation has incurred losses for several years, and currently has an $800,000 deficit in retained earnings. It has 100,000 shares of $10 par value common stock issued and outstanding, and has additional paid-in capital of $600,000. Due to a permanent decline in its economic prospects, Zoyhofski believes its assets are overvalued. As part of a quasi-reorganization, a $400,000 writedown is proposed to reflect the changed conditions. The present $10 par common stock is to be exchanged for a new issue bearing a $1 par value; each shareholder will receive one new share for every ten old shares. Required a. Prepare journal entries to record the quasi-reorganization. Description Debit Credit Answer Answer Answer Answer Answer Answer To write down assets. Answer Answer Answer Answer Answer Answer Additional paid-in capital Answer Answer To record exchange of equity interests. Answer Answer Answer Answer Answer Answer To eliminate deficit. b. Prepare the shareholders’ equity section of Zoyhofski’s balance sheet after the quasi-reorganization. Shareholders' equity section after quasi-reorganization Common stock, $1 par value Answer Additional paid-in capital Answer Retained earnings Answer Total shareholders' equity Answer