Question

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?

Answer 1

Answer:100%

Explanation:

The total authorised share of sweet is 60,000 shares. It issued 75% to Paulus which represents 45,000 shares leaving a balance of 15,000 shares.

The issuance of the balance of 15,000 to Paula which represents 25% of the total shares invariably give Paulus a 100 holding in sweet.