Use the following fact pattern for questions 1 through 5:

Black Company purchased 100 percent of the common shares of White Company by issuing shares of common stock valued at $900,000. Selected accounts from Black's balance sheet at the date of combination are as follows:

Inventory	$720,000
Building and Equipment (net)	1,000,000
Common Stock	840,000
Retained Earnings	1,100,000

Selected accounts from the balance sheet of White at acquisition are as follows:

Inventory	$200,000
Building and Equipment (net)	900,000
Common Stock	450,000
Additional Paid-In Capital	450,000
Retained Earnings	(60,000)

On the date of purchase, White's inventory and buildings and equipment had fair values of $255,000 and $870,000, respectively.

Based on the information given above, the amount to be reported for retained earnings in the consolidated balance sheet immediately after the combination is:

	1.	$1,040,000
	2.	$1,200,000
	3.	$1,100,000
	4.	$1,840,000
	5.	None of the above