Question

Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,300. Jurion pays $17,200 for James and raises the needed funds through an issue of long-term debt.

Jurion Co.
Current assets	$	12,750		Current liabilities	$	5,700
Net fixed assets		37,500		Long-term debt		10,300
				Equity		34,250
Total	$	50,250		Total	$	50,250

James, Inc.
Current assets	$	3,700		Current liabilities	$	1,700
Net fixed assets		7,200		Long-term debt		2,200
				Equity		7,000
Total	$	10,900		Total	$	10,900

Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations.)

Jurion Co., post-merger
Current assets	$			Current liabilities	$
Fixed assets				Long-term debt
Goodwill				Equity
Total	$			Total	$

Answer 1

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