Items 1 and 2 are based on the following:
On December 31, 2006, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its $10 par common stock, with a market price of $18 a share, for all of Saxe’s common stock. The stockholders’ equity section of each company’s balance sheet immediately before the combination was
|
Poe |
Saxe |
|
|
Common stock |
3,000,000 |
$1,500,000 |
|
Additional paid-in capital |
1,300,000 |
150,000 |
|
Retained earnings |
2,500,000 |
850,000 |
|
$6,800,000 |
$2,500,000 |
In the December 31, 2006 consolidated balance sheet, additional paid-in capital should be reported at
- $ 950,000
- $1,300,000
- $1,450,000
- $2,900,000
In the December 31, 2006 consolidated balance sheet, common stock should be reported at
- $3,000,000
- $3,500,000
- $4,000,000
- $5,000,000