Justin Thyme is one of three owners of a small spice company. Each owner of the company has 1,000 shares of stock. The three owners agree to bring on board a fourth owner and to give her an equal share in the company, so each owner now has 750 shares. Last year the company earned a profit of $50,000. Which of the following statements are true? a. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 and remains the same with the new owner on board as the total number of shares did not change. b. The number of shares held by each owner and the earnings per share remained in both ownership structures. c.Each owner previously held 25% ownership stake in the company and now owns 33%. The earnings per share under the prior ownership structure was $12.50 but with the new owner on board it has increased to $16.67. d. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 but with the new owner on board it has decreased to $12.50.
Justin Thyme is one of three owners of a small spice company. Each owner of the company has 1,000 shares of stock. The three owners agree to bring on board a fourth owner and to give her an equal share in the company, so each owner now has 750 shares. Last year the company earned a profit of $50,000. Which of the following statements are true? a. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 and remains the same with the new owner on board as the total number of shares did not change. b. The number of shares held by each owner and the earnings per share remained in both ownership structures. c.Each owner previously held 25% ownership stake in the company and now owns 33%. The earnings per share under the prior ownership structure was $12.50 but with the new owner on board it has increased to $16.67. d. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 but with the new owner on board it has decreased to $12.50.
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 30P
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Justin Thyme is one of three owners of a small spice company. Each owner of the company has 1,000 shares of stock. The three owners agree to bring on board a fourth owner and to give her an equal share in the company, so each owner now has 750 shares. Last year the company earned a profit of $50,000. Which of the following statements are true?
a. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 and remains the same with the new owner on board as the total number of shares did not change.
b. The number of shares held by each owner and the earnings per share remained in both ownership structures.
c.Each owner previously held 25% ownership stake in the company and now owns 33%. The earnings per share under the prior ownership structure was $12.50 but with the new owner on board it has increased to $16.67.
d. Each owner previously held 33% ownership stake in the company and now owns 25%. The earnings per share under the prior ownership structure was $16.67 but with the new owner on board it has decreased to $12.50.
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