Jean and John Inc Had the Following Balance Sheets on August

question 45

Essay

Jean and John Inc had the following balance sheets on August 31, 2018: $\begin{array}{|l|l|l|l|}\hline & \text { Jean Inc. } & \text { John Inc. } & \text { John Inc. } \\\hline & \text { (carry ing value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 1,200,000 & \$ 300,000 & \$ 300,000 \\\hline \text { Accounts Receivable } & \$ 400,000 & \$ 64,000 & \$ 64,000 \\\hline \text { Inventory } & \$ 240,000 & \$ 80,000 & \$ 60,000 \\\hline \text { Plant and Equipment (net) } & \$ 860,000 & \$ 256,000 & \$ 300,000 \\\hline \text { Trademark } & & \$ 20,000 & \$ 36,000 \\\hline \text { Total Assets } & \$ 2,700,000 & \$ 720,000 & \\\hline & & & \\\hline \text { Accounts Payable } & \$ 1,500,000 & \$ 300,000 & \$ 300,000 \\\hline \text { Bonds Pay able } & \$ 600,000 & \$ 240,000 & \$ 210,000 \\\hline \text { Common Shares } & \$ 500,000 & \$ 60,000 & \\\hline \text { Retained Earnings } & \$ 100,000 & \$ 120,000 & \\\hline \text { Total Labilities and Equiby } & \$ 2,700,000 & \$ 720,000 & \\\hline & & & \\\hline\end{array}$
On August 31^, 2018, Jean's date of acquisition, Jean Inc. purchased 90% of John Inc. for $400,000.
Prepare Jean Inc.'s consolidated balance sheet on the date of acquisition using the Entity Theory.

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Definitions:

Elastic Demand

Demand for which a given percentage change in price results in an even larger percentage change in quantity demanded.

Odd Pricing

A pricing tactic in which a firm prices products a few cents below the next dollar amount.

Price Sensitivity

How much the desire for a product or service shifts in response to price variations.

Strategic Decisions

High-level choices that determine the direction and success of an organization.