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 ofcommon.

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Bilge Pumpworks Seaworthy Rope Company Balance Sheet Items Book Value Fair Value Book Value Fair Value Cash & Receivables Inventory 5 90,000 100,000 100,000 400,000 Less: Accumulated Depreciation (150,000) 90,000 20,000 30,000 10,000 200,000 (80,000) $680,000 $180,000 $20,000 42,000 15,000 140,000 Plant & Equipment 300,000 Total Assets 540,000 5217000 S 20,000 Current Liabilities Capital Stock Capital in Excess of Par Value Retained Earnings Total Liabilities & Equities S 80,000 200,000 20,000 240,000 5540,000 80,000 20,000 20,000 5,000 135,000 $180,000