Accounting 7a Quiz

November 23, 2015

On January 3, 2015, Jesseca Corporation acquired all of Christine

Companys assets and liabilities by issuing its P5 par common stock.
Christines P10 par value common shares had a market price of P55 each
at the time of combination. Presented below is the partial Statement of
Financial Position for Jesseca Corporation and Christine Company prior to
and immediately following the business combination:

Cash
Accounts Receivable
Inventory
Equipment (net)
Goodwill
Total Assets
Accounts Payable
Bonds Payable
Bond Premium
Common stock
Share premium
Retained earnings
Total Liabilities and
Equity

Jesseca
Book
Value
P
50,000
?
100,000
350,000
30,00
0
P
620,000

Christine
Book
Fair Value
Value
P
P
20,000
20,000
55,000
55,000
?
110,000
140,000
?
40,00
0
_
P P
325,000
?

P
70,000
300,000
120,000
10,000
120,00
0
P
620,000

P
30,000
100,000
50,000
55,000
?
P
325,000

P
30,000
?

_
P
?

Combine
d
P
70,000
145,000
?
570,000
?
P1,077,0
00
P
100,000
400,000
5,000
190,000
262,000
?
P1,077,0
00

Using the partial Statement of Financial Position, answer the following

questions:
1. What was the book value of Christines inventory at the date of
combination?
2. What was the fair value of total assets reported by Christine at the date
of combination?
3. What was the market value of Christines bonds at the date of
combination?

4. How many shares of common stock did Jesseca issue in completing the
acquisition of Christine?
5. What was the marker price per share of Jessecas stock at the date of
combination?
6. What amount of goodwill will be reported following the business
combination?
7. What amount of retained earnings did Christine report immediately
before the combination?
8. What amount of retained earnings will be reported following the
business combination?
Present your computations in good form.
Accounting 7a Quiz

November 23, 2015

On January 3, 2015, Jesseca Corporation acquired all of Christine

Companys assets and liabilities by issuing its P5 par common stock.
Christines P10 par value common shares had a market price of P55 each
at the time of combination. Presented below is the partial Statement of
Financial Position for Jesseca Corporation and Christine Company prior to
and immediately following the business combination:

Cash
Accounts Receivable
Inventory
Equipment (net)
Goodwill
Total Assets
Accounts Payable
Bonds Payable
Bond Premium
Common stock
Share premium
Retained earnings

Jesseca
Book
Value
P
50,000
?
100,000
350,000
30,00
0
P
620,000

Christine
Book
Fair Value
Value
P
P
20,000
20,000
55,000
55,000
?
110,000
140,000
?
40,00
0
_
P P
325,000
?

P
70,000
300,000
120,000
10,000
120,00
0

P
30,000
100,000
50,000
55,000

P
30,000
?

P
100,000
400,000
5,000
190,000
262,000

Combine
d
P
70,000
145,000
?
570,000
?
P1,077,0
00

Total Liabilities and

Equity

P
620,000

P
325,000

P
?

P1,077,0
00

Using the partial Statement of Financial Position, answer the following

questions:
1. What was the book value of Christines inventory at the date of
combination?
2. What was the fair value of total assets reported by Christine at the date
of combination?
3. What was the market value of Christines bonds at the date of
combination?

4. How many shares of common stock did Jesseca issue in completing the
acquisition of Christine?
5. What was the marker price per share of Jessecas stock at the date of
combination?
6. What amount of goodwill will be reported following the business
combination?
7. What amount of retained earnings did Christine report immediately
before the combination?
8. What amount of retained earnings will be reported following the
business combination?
Present your computations in good form.