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A company emerging from Chapter 11 reorganization has the following balance sheet:
| Cash | $ 25,000 | Postpetition liabilities | $ 200,000 |
| Accounts receivable | 60,000 | Liabilities subject to compromise | 1,500,000 |
| Inventories | 400,000 | Common stock | 300,000 |
| Plant and equipment, net | 1,200,000 | Retained deficit | (315,000) |
| Total | $1,685,000 | Total | $1,685,000 |
The plan of reorganization provides for the following:
| * | Estimated reorganization value is $1,300,000. |
| * | Liabilities subject to compromise are replaced with $1,000,000 in notes payable and 80% of the new common stock issue. |
| * | Existing shareholders receive 20% of the new stock issue |
| * | Inventories and plant and equipment are written down to their fair values of $250,000 and $800,000, respectively. |
| * | There are no previously unreported identifiable intangible assets. |
The entry to record restructuring of the interests of prior shareholders results in a credit to additional paid-in capital of:
| | A. | $300,000 |
| | B. | $280,000 |
| | C. | $220,000 |
| | D. | $200,000 |
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