The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, 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 outstanding shares of Sanchez Company in the ratio of 1/2 share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $52; Sanchez, $26. The fair values of Sanchez Company’s assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair value of $673,480. Petrello SanchezCash $514,780 $215,700Receivables 448,510 244,080Inventories 1,897,100 220,590Plant and equipment (net) 3,575,190 742,500 Total assets $6,435,580 $1,422,870 Current Liabilities $1,191,300 $288,320Common stock ($16 par value) 3,745,810 800,000Other contributed capital 378,900 —0—Retained earnings 1,119,570 334,550 Total equities $6,435,580 $1,422,870Prepare a balance sheet for Petrello Company immediately after the merger. (List assets in order of liquidity.)PETRELLO COMPANYBalance SheetJanuary 1, 2014Assets CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings $ CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Net Income / (Loss) Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Liabilities and Stockholders' Equity CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings $ CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Net Income / (Loss) Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $

This question deals with business combination concept. In business combination accounting, goodwill…

Answered: Prepare a balance sheet for Petrello…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, 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 outstanding shares of Sanchez Company in the ratio of 1/2 share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $52; Sanchez, $26. The fair values of Sanchez Company’s assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair value of $673,480.

	*Petrello*	*Sanchez*
Cash	$514,780	$215,700
Receivables	448,510	244,080
Inventories	1,897,100	220,590
Plant and equipment (net)	3,575,190	742,500
Total assets	$6,435,580	$1,422,870

Current Liabilities	$1,191,300	$288,320
Common stock ($16 par value)	3,745,810	800,000
Other contributed capital	378,900	—0—
Retained earnings	1,119,570	334,550
Total equities	$6,435,580	$1,422,870

Prepare a balance sheet for Petrello Company immediately after the merger. (List assets in order of liquidity.)

PETRELLO COMPANY Balance Sheet January 1, 2014
Assets
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings			$
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Net Income / (Loss) Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity			$
Liabilities and Stockholders' Equity
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings			$
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
CashCommon StockGoodwillInventoriesLiabilitiesOther Contributed CapitalPlant and Equipment (net)ReceivablesRetained Earnings
Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Net Income / (Loss) Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity			$

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.