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Mount Rainier Company owns 100% of the 60,000 outstanding shares of Mount Washington Company. Mount Rainier accounts for the investment in Mount Washington using the

Mount Rainier Company owns 100% of the 60,000 outstanding shares of Mount Washington Company. Mount Rainier accounts for the investment in Mount Washington using the equity method, and it has current balance of $750,000 in the Investment in Mount Washington account. Mount Washington issues 20,000 new shares to the public for $25 per share. How does this transaction affect the Investment in Mount Washington account that appears on Mount Rainier financial records?

An increase to $1,250,000

An increase to 937,500

A decrease to $250,000

A decrease to $500,000

No change

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