On March 1, 2020 Ajax Corporation acquiredall the assets and liabilities of ChelseaCorporation by issuing shares of its commonstock. The following is a balance sheet datafor the companies prior to the businesscombination and immediately following thecombination:AjaxChelsea CombinedCorporation CorporationCash$$ 75,000$ 35,000 $ 110,000Accounts92,00030,000122,000receivableInventory45,00043,00098,000Equipment(net)420,000150,000620,000GoodwillXXXTotal$ 632,000$ 258,000XXXAssetsAccounts$ 375,000$ 125,000 $ 500,000payableCommonstock, $2120,00040,000200,000parAdditional85,00030,000245,000paid-incapitalRetained52,00063,000XXearningsTotal$ 632,000$ 258,000XXXLiabilities& EquityWhat balance in Retained earnings will thecombined entity report immediately followingthe combination?Select one:O a. $ 52,000O b. $ 0O c. $ 63,000O d. $ 115,000

Consolidated financial statements: When an investor company holds above 50% in the outstanding stock…

Answered: What balance in Retained earnings will…

What balance in Retained earnings will the combined entity report immediately following the combination? Select one: O a. $ 52,000 O b. $0 O c. $ 63,000 O d. $ 115,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On March 1, 2020 Ajax Corporation acquired
all the assets and liabilities of Chelsea
Corporation by issuing shares of its common
stock. The following is a balance sheet data
for the companies prior to the business
combination and immediately following the
combination:
Ajax
Chelsea Combined
Corporation Corporation
Cash
$
$ 75,000
$ 35,000 $ 110,000
Accounts
92,000
30,000
122,000
receivable
Inventory
45,000
43,000
98,000
Equipment
(net)
420,000
150,000
620,000
Goodwill
XXX
Total
$ 632,000
$ 258,000
XXX
Assets
Accounts
$ 375,000
$ 125,000 $ 500,000
payable
Common
stock, $2
120,000
40,000
200,000
par
Additional
85,000
30,000
245,000
paid-in
capital
Retained
52,000
63,000
XX
earnings
Total
$ 632,000
$ 258,000
XXX
Liabilities
& Equity
What balance in Retained earnings will the
combined entity report immediately following
the combination?
Select one:
O a. $ 52,000
O b. $ 0
O c. $ 63,000
O d. $ 115,000

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