Ryan Company Purchased 80% of Chase Company for $270,000 When

question 23

Multiple Choice

Ryan Company purchased 80% of Chase Company for $270,000 when Chase's book value was $300,000. Chase has 50,000 shares outstanding and currently has a book value of $400,000.Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.What is the new percent ownership Ryan owns in Chase?

• A) 80.0%.
• B) 87.5%.
• C) 90.0%.
• D) 75.0%.
• E) 82.5%.

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Definitions:

Markdown Rate

The percentage reduction from the original price of an item to its sale price.

Mark-up

Surcharging the cost price of commodities to envelop overheads and assure profits.

Springtime Shipment

Scheduled transportation of goods during the spring season, implying a specific timing for shipping operations.

Markdown

The reduction of the selling price of goods or services, often to clear old stock or respond to decreased demand.