Webb Company purchased 90% of Jones Company for $990,000 when the book value of Jones was $1,000,000. Jones currently has 100,000 shares outstanding and a book value of $1,200,000.Jones sells 20,000 shares of previously unissued shares of its common stock to outside parties for $10 per share.What is the adjusted book value of Jones after the sale of the shares?
A) $200,000.
B) $1,400,000.
C) $1,280,000.
D) $1,050,000.
E) $1,440,000.

Question

Quizplus · Accepted Answer

The adjusted book value of Jones after the sale of the shares is calculated by adding the proceeds from the sale of the new shares to the current book value. Jones sold 20,000 shares at $10 each, raising $200,000. Adding this to the current book value of $1,200,000 gives an adjusted book value of $1,400,000.

Webb Company Purchased 90% of Jones Company for $990,000 When