Problem 21-3 Balance Sheets for Mergers

Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,100. Jurion pays $16,960 for James and raises the needed funds through an issue of long-term debt.

Jurion Co. Current assets $ 12,600 Current liabilities $ 5,620

Net fixed assets 37,200 Long-term debt 10,200

Equity 33,980

Total $ 49,800 Total $ 49,800

James, Inc. Current assets $ 3,640 Current liabilities $ 1,620

Net fixed assets 7,040 Long-term debt 2,140

Equity 6,920

Total $ 10,680 Total $ 10,680

Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations.)

Jurion Co., post-merger Current assets $ _____ Current liabilities $ _____

Fixed assets_____ Long-term debt _____

Goodwill_____ Equity ______

Total $ ____ Total $ ___________