Stock splits and its effect on net worth
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A two-for-one stock split will cause adjustments in the common stock account. The number of shares will double and the par value halved. Example:
Common stock (6 million shares, at $5 par value)...........30,000,000
Common stock( 9 million shares???, at $5 par value???).......45,000,000
Paid-in capital in excess of par 15,000,000
Retained earnings 45,000,000
Net worth...........105,000,000
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This provides the steps to calculate the Stock splits and its effect on net worth.
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A two-for-one stock split will cause adjustments in the common stock account. The number of shares will double and the par value halved. ...
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