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

question 49

Multiple Choice

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 new percent ownership of Webb in Jones after the stock issuance?

• A) 75%.
• B) 90%.
• C) 80%.
• D) 64%.
• E) 60%.

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Definitions:

Contingency Approach

A management theory that suggests the best way to organize and make decisions is dependent on the specific situation, emphasizing that there is no one best way to manage.

Managerial Responses

The actions or decisions taken by managers in reaction to internal or external factors impacting the organization.

Two-factory Theory

A psychological theory that proposes that human emotions consist of two components: physical arousal and a cognitive label that specifies the emotion.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to a learned response.