Prior to being united in a business combination, Atkins, Inc., and Waterson Corp

Question

Prior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following stockholders’ equity figures:

Atkins issues 69,000 new shares of its common stock valued at $3 per share for all of the outstanding stock of Waterson. Immediately afterward, what are consolidated Additional Paid-In Capital and Retained Earnings, respectively?

Multiple Choice

a. $149,500 and $433,250.

b.$143,500 and $313,000.

c. $254,000 and $313,000.

d. $251,500 and $433,250.

Atkins Waterson Common stock ($1 par value) $ 232,000 $ 72,000 Additional paid-in capital 116,000 33,500 Retained earnings 313,000 120,250

Explanation / Answer

Answer

C ) 254000 and 313000

additional paid in capital = 116000 + ( 69000 * 2 )

= 254000

retained earning = 313000

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