Combined Balance SheetBilge Pumpworks and Seaworthy Rope Company agreed to merge on Januar...

Combined Balance Sheet

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 10,000 shares of its $20 par value shares outstanding on January 1, 20X3, and Seaworthy has 4,000 shares of $5 par value stock outstanding. The market values of the shares are $300 and $50, respectively.

Required

a. Bilge issues 700 shares of stock in exchange for all of Seaworthy’s net assets. Prepare a balance sheet for the combined entity immediately following the merger.

b. Prepare the stockholders’ 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.