Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013, are as follows: 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%.

Question

Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013, are as follows:  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%.

Quizplus · Accepted Answer

Shares Outstanding 100,000 × .90 = 90,000 Parent's Shares100,000 + 20,000 = 120,000 New Outstanding Shares90,000/120,000 = 75% New Ownership Percentage

Webb Company Owns 90% of Jones Company