Question

Prior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following...

Prior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following stockholders’ equity figures: Atkins Waterson Common stock ($1 par value) $ 242,000 $ 55,000 Additional paid-in capital 121,000 25,000 Retained earnings 336,000 112,750 Atkins issues 61,000 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 $243,000 and $336,000. $248,000 and $448,750. $140,000 and $336,000. $146,000 and $448,750.

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Answer #1

Answer:

Consolidated Additional Paid-in Capital and Retained Earnings Respectively are $243000 and $336000 (Options A)

Value of shares issued= $183000 (61000*$3)

Par Value of shares issued= $61000 (61000*$1)

Additional paid-in Capital (New Shares)= $122000 (61000*$2)

Additional paid-in Capital (Existing Shares)= $121000

Therefore, Consolidated Additional Paid-in Capital= $243000

Since Atkins Inc. made no changes in Retained Earnings,

Therefore, Retained Earnings= $336000.

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