Carnes Has the Following Account Balances as of May 1

question 43

Multiple Choice

Carnes has the following account balances as of May 1, 2012 before an acquisition transaction takes place. $\begin{array}{lr}\text { Inventory } & \$ 100,000 \\\text { Land } & 400,000 \\\text { Buildings (net) } & 500,000 \\\text { Common stock (\$10 par) } & 600,000 \\\text { Additional paid-in capital } & 200,000 \\\text { Retained Earnings } & 200,000 \\\text { Revenues } & 450,000 \\\text { Expenses } & 250,000\end{array}$ The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2012, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account. What will be Riley's balance in its common stock account as a result of this acquisition?

• A)$300,000.
• B)$990,000.
• C)$1,000,000.
• D)$1,590,000.
• E)$1,600,000.

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Definitions:

Endospores

Resistant, dormant structures formed within some bacteria, enabling survival in harsh environmental conditions.

Exotoxins

Potent toxins secreted by bacteria that can cause damage to the host by destroying cells or disrupting normal cellular metabolism.

Capsules

In microbiology, a gelatinous covering that encloses some bacteria, enhancing their ability to cause disease.

Sex Pili

Hair-like structures on the surface of bacterial cells that are involved in the transfer of DNA during conjugation.