Question

The balance sheets of Petrello Company and Sanchez Company as of January 1, 2011, are presented below. On that date, after an extended period of negotiation, the two companies agreed to merge. To effect the merger, Petrello Company is to exchange its unissued common stock for all the oustaning shares of Sanchez Company in the ratio of 1/2 share of Petrello each share of Sanchez. Market values of the shares were agreed on as Petrello, $48; Sanchez, $24. The fair values of Sanchez Company's assets and laibilities are equal to their book values with the exception of plant and equipment. which has an estimated fair value of $720,000.
Pertello Sanchez
Cash $480,000 $200,000
Receivables 480,000 240,000
Inventories 2,000,000 240,000
Plant &
equipment(net)3,840,000 800,000
_________ ________
Total assets $6,800,000 $1,480,000
Liabilities $1,200,000 320,000
Common stock
$16 par value 3,440,000 800,000
Other contrivuted
capital 400,000 000,000
Retained
earnings 1,760,000 360,000
_________ _________
Total equities $6,800,000 $1,480,000

Required: Prepare a balance sheet for Petrello Company immediately after the merger.

Can anyone please help me? Thank you

Answer 1

how to prepare the balance sheet for petrello company