Webb Company Owns 90% of Jones Company

question 25

Multiple Choice

Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2011, 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.

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Definitions:

Direct Labor Hours

The total number of working hours spent by employees directly involved in the production of goods or services.

Machine Hours

A measure of the amount of time a machine is operated, used in manufacturing to allocate costs to products based on machine usage.

Hooded Jacket

A type of apparel that includes a hood attached to it, often used for casual wear or protection against weather.

Departmental Overhead Rate

A calculation used to allocate overhead costs to specific departments, based on varying bases such as labor hours or machine hours.