4

On December 31, 1988, 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

Assume that the merger is accounted for using the acquisition method of accounting. December 31, 1988 additional paid-in capital should be reported at:

• $950,000

• $1,450,000

• $2,900,000

• $1,300,000