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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education