Pumpworks Inc. and Seaworthy Rope Company agreed to merge on January 1, 20X3. On the date of the merger agreement, the companies reported the following data:

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. Pumpworks 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 Pumpworks 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.

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Balance Sheet Items Cash & Receivables Inventory Land Plant & Equipment Less: Accumulated Depreciation Total Assets Current Liabilities Capital Stock Capital in Excess of Par Value Retained Earnings Total Liabilities & Equities Pumpworks Seaworthy Rope Company Fair Value $ 20,000 42,000 Book Value Fair Value Book Value $ 90,000 $ 90,000 100,000 150,000 $ 20,000 30,000 100,000 140,000 10,000 400,000 } 300,000 200,000 (80,000) $540,000 $680,000 $ 80,000 $ 80,000 200,000 20,000 240,000 $540,000 15,000 $180,000 $ 20,000 20,000 5,000 135,000 $180,000 140,000 $217,000 $ 20,000