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 adjustment is needed for Webb's investment in Jones account?
A) $180,000 increase.
B) $180,000 decrease.
C) $30,000 increase.
D) $30,000 decrease.
E) No adjustment is necessary.

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 adjustment is needed for Webb's investment in Jones account?
A) $180,000 increase. 
B) $180,000 decrease. 
C) $30,000 increase. 
D) $30,000 decrease. 
E) No adjustment is necessary.

Quizplus · Accepted Answer

$1,400,000 × .75 = $1,050,000 - $1,080,000 = $30,000 Decrease in Investment Account

Webb Company Owns 90% of Jones Company