1-Balance Sheets for Mergers. Assume that the following balance sheets are stated at book value. Suppose that Meat Co. purchases Loaf, Inc.

The fair market value of Loafs fixed assets is $9,800 versus the $6,900 book value shown. Meat pays $17,800 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method.

Meat Co. Current assets $18,000 Current liabilities $ 6,100 Net fixed assets 43,000 Long-term debt 13,700 Equity 41.200 Total $61,000 Total $61,000 Loaf, Inc. Current assets $ 3,900 Current liabilities $ 1,500 Net fixed assets 6,900 Long-term debt 2,600 Equity 6,700 Total $10,800 Total $10,800