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 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

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 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.

Quizplus · Accepted Answer

Starting BV $1,200,000 + Add'l Shares Sold $200,000 ($10 × 20,000) = $1,400,000 Current BV

Webb Company Owns 90% of Jones Company