Balances of additional paid in capital and retained earnings
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Effective April 27,2005 the stockholders of Dorr Corporation approved a two for one split of the company's common stock and an increase in authorized common shares from 100,000 shares (par value of $20 per share) to 200,000 shares (par value of $10 per share). The stock split shares were issued on June 30, 2005. Dorr stockholders' equity accounts immediately before issuance of the stock split shares were:
Common stock ($20 par value); authorized
Shares, shares outstanding 50,000 1,000,000
Additional paid-in capital $150,000
Retained earnings 1,350,000
Required:
After issuing the stock split shares, what are the balances of additional paid in capital and retained earnings in Dorr's June 30, 2005 statement of stockholders' equity?
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Solution Summary
This provides the steps to calculate the balances of additional paid in capital and retained earnings in Dorr's June 30, 2005 statement of stockholders' equity
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When a company believes that investors are shying away from purchasing or holding its stock because the market price is too high or too low, the board of directors may approve a stock split. A stock split is similar to a stock dividend in that new ...
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