Advanced Financial Accounting
Combined Balance Sheet Exercise-AnswersBilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1, 20X3. On this date of the merger agreement, the companies reported the follow data:
P1-40 combined balance sheet
Bilge Pumpworks has 10,000 shares of its $20 par value stock outstanding. The market value of the shares are $300 and $50, respectively.
Required:(a). Bilge issues 700 shares of stock in exchange for all of Seaworthy’s net asset. Prepare a balance sheet for the combined entity immediately following the merger.
(b). Prepare the stockholder’s equity section of the combined company’s balance sheet, assuming Bilge acquires all of Seaworthy’s net assets by issuing:
1. 1,100 shares of common
2. 1,800 shares of common
3. 3,000 shares of common