Bilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1, 20X3. O
ID: 2419617 • Letter: B
Question
Bilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1, 20X3. On the date of the merger agreement, the companies reported the following data:
Bilge Pumpworks has 10,900 shares of its $30 par value shares outstanding on January 1, 20X3, and Seaworthy has 4,900 shares of $15 par value stock outstanding. The market values of the shares are $300 and $70, respectively.
8.
value:
2.50 points
Required information
Prepare the stockholders’ equity section of the combined company’s balance sheet, assuming Bilge acquires all of Seaworthy’s net assets by issuing:
Bilge Pumpworks and Seaworthy Rope Company agreed to merge on January 1, 20X3. On the date of the merger agreement, the companies reported the following data:
Explanation / Answer
1.Shareholders equity (combined)
Common stock (10,900 + 1,200)= 12,100 *$30 = $363,000
capital in excess 1,200 *270=324,000 + 26,000= $350,000
retained earnings $189,000
Total $902,000
2. Shareholders equity (combined)
Common stock (10,900 + 1,900)= 12,800 *$30 = $384,000
capital in excess 1,900 *270=513,000 + 26,000= $539,000
retained earnings $189,000
Total $1,112,000
3. Shareholders equity (combined)
Common stock (10,900 + 3,400)= 14,300 *$30 = $429,000
capital in excess 3,400 *270=918,000 + 26,000= $944,000
retained earnings $189,000
Total $1,562,000
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