Webb Company owns 90% of Jones Company. The original balances presented for Jone
ID: 2444971 • Letter: W
Question
Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2011, are as follows
Jones company:
Shares outstanding 100,000
Book value of jones 1,200,000
book value per share $12
Webb company:
shares owned of jones 90,000
book value of investment 1,080,000
Jones sells 20,000 shares of previously unissued shares of its common stock to outside parties for $10 per share. What is the new percent ownership of Webb in Jones after the stock issuance?
A.
75%.
B.
90%.
C.
80%.
D.
64%.
E.
60%.
A.
75%.
Explanation / Answer
Shares hold by webb company in jones company = 90%
Total shares = 100000
New issue = 20000
Total = 100000+20000 = 120000
New holding = 90000*100/120000 = 75%
The correct answer is A. 75%
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