On March 1, 2020 Ajax Corporation acquired all the assets and liabilities of Chelsea Corporation by issuing
Question:
On March 1, 2020 Ajax Corporation acquired all the assets and liabilities of Chelsea Corporation by issuing shares of its common stock. The following is a balance sheet data for the companies prior to the business combination and immediately following the combination:
Ajax Corporation | Chelsea Corporation | Combined | |
Cash | $ 75,000 | $ 35,000 | $ 110,000 |
Accounts receivable | 92,000 | 30,000 | 122,000 |
Inventory | 45,000 | 43,000 | 98,000 |
Equipment (net) | 420,000 | 150,000 | 620,000 |
Goodwill | XXX | ||
Total Assets | $ 632,000 | $ 258,000 | XXX |
Accounts payable | $ 375,000 | $ 125,000 | $ 500,000 |
Common stock, $2 par | 120,000 | 40,000 | 200,000 |
Additional paid-in capital | 85,000 | 30,000 | 245,000 |
Retained earnings | 52,000 | 63,000 | XXX |
Total Liabilities & Equity | $ 632,000 | $ 258,000 | XXX |
What number of shares did Ajax issue for this acquisition?
Select one:
a. 40,000 shares
b. 60,000 shares
c. 100,000 shares
d. 80,000 shares
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker