Faribault Company's balance sheet and income statement are shown below (in millions of dollars). The company and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the $5 preferred will be exchanged for one share of $1.00 preferred with a par value of $25 plus one 11% subordinated income debenture with a par value of $25. The $4 preferred issue will be retired with cash. The company's tax rate is 21 percent. Current Assets                                400 Current liabilities                   350
Net fixed assets                              450 Advance payments                       20
    $5 preferred stock, $100 par value (1,000,000) shares                   100
$9 preferred stock, no par, callable at 100 (160,000 shares)                   30
Common stock, $0.10 par value (10,000,000) shares                      50
Retained earnings                    300
Total assets                                    850 Total claims                    850

Required:
a. Construct the pro forma balance sheet after reorganization takes place.
b. Construct the pro forma income statement after reorganization takes place. How does the recapitalization affect net income available to common stockholders?