On January 1 2016, Paulus Company purchased 75% of Sweet Corporation for $500,000. Sweet' stockholders' equity on that date was equal to $600,000 and Sweet had 60,000 shares issued and outstanding on that date. Sweet Corporation sold an additional 15,000 shares of previously unissued stock on December 31, 2016. Assuming that Paulus Company purchased the additional shares, what would be their current percentage ownership on December 31, 2016?

Question

Quizplus · Accepted Answer

Before the additional shares were issued, Paulus Company owned 75% of the 60,000 shares, which is 45,000 shares. After Sweet Corporation issued an additional 15,000 shares and assuming Paulus purchased all of them, Paulus would then own 60,000 shares out of a total of 75,000 shares (60,000 original + 15,000 new), which is 80% ownership.

On January 1 2016, Paulus Company Purchased 75% of Sweet