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Stock Split and Equity Accounts

The owners' equity accounts for a company are shown here:

Common stock ($1 par value) $ 8,000
Capital surplus 156,000
Retained earnings 510,000
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Total owners' equity $674,000

a. If the company declares a 4-for-1 stock split, there will now be __32,000__shares (Round answers to nearest whole number) outstanding at a par value of $__?__per share (Round answer to 2 decimal places). The equity accounts will or will not change ? __will not__

b. If the company declares a 1-for-3 reverse stock split, there will now be __24,000__ shares (Round answers to nearest whole number) outstanding at a par value of $ __3__ per share (Round answer to nearest whole dollar). The equity accounts will or will not change? __will not__

this is what i have so far:
a. 8,000x 4/1 =32,000 but the second part i dont know

b. 8,000x 3/1= 24,000<---- but this is not right and the second part is 3 which is right can you please assist me with the rest

Solution Preview

In stock split the number of shares are increased the the par value goes down proportinately. A 4 for 1 stock split would increase the number of shares 4 times ...

Solution Summary

The solution explains the impact of a stock split and reverse stock split on the stockholders equity accounts of a company

$2.19