Question

A firm has the following balance sheet: Assets Liabilities and Equity Cash $ 20,000 Accounts payable 20,000 Acctunts receivable 163,000 Long-term debt Common stock ($10 par 117,000 Inventory 75,000 30,000 3.000 sharea outstanding) Additonal paid-in capital Retaned eamings Plant and equipment 210,000 158,000 143.000 $460,000 $468,000 a. Construct a new balanoe sheet showing the impact of a three for-ane splt. f the ourrent market price of the stock is $53, what the price after the split? Round the par value and the market price after the split to the nearest cent, the number of shares outstending to the nearest whole number and the other answers to the nearest dolar Assets Liabilities and Equity Cash Accounts payable Accounts recaivable Long-term debt Common stock ( 10 par Inventory 3,000 shares outstanding) Plant and eoupment Addtional paid-in capital Retaned earmings Price of the oommon stock after the solti

Answer 1

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- 2x Σ AutoSum : A Fill 2 Sort & m Find & 2 Clear Filter Editing Select P Q R 284 PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Calibri -11AA = = = Dr Wrap Text General Ea Copy Paste Format Painter BI U D- DA Merge & Center - $ % , :.: Formatting as Table Styles Clipboard Font Alignment Number Styles Cells CN281 fic I CG H a a Cck a CM CN o 281 a three for one stock split 282 that is 3 shares are given for every share held 283 no change in any other item except par value, it will be now 10/3 = 3.33 PAR VALUE = $ 3.33 285 286 CURRENT PRICE = $53 PRICE AFTER SPLIT = $53/3 = $17.67 287 288 Existing number of shares 3000 289 After split, number of shares outstanding = 3000 X 3 = 9000 290 291 BALANCE SHEET 292 ASSETS LIABILITIES & EQUITY CASH 20000 ACCOUNTS PAYABLE 20000 ACCOUNTS RECEIAVBLE 163000 LONG TERM DEBT 117000 295 INVENTORY 75000 COMMON STOCK 30000 296 ($3.33 PAR, 9000 SHARES OUTSTANDING) 297 PLANT & EQUIPMENT 210000 ADDITIONAL PAID IN CAPITAL 158000 RETAINED EARNINGS 143000 299 468000 468000 300 price of common stock after split = 17.67 WIN STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS price quote EVA MVA Rea ferences DOR 293 294 298 301 deberk 17.67 I LEVERAGED BUY 20 . SWAI 120% * 0 + ENG 06-11-2019

- 2x Q R 311 313 PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Σ AutoSum : A Calibri -11AA = = = Dr Wrap Text General Ea Copy Fill 2 m Paste BI U D- DA Merge & Center - Format Painter $ % , Conditional Format :.: Cell Insert Delete Format Sort & Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing CO308 - CG H a a CK a CM CN co - CP 306 10% stock dividend 307 additional shares to be issued = 3000 x 10% = 300 308 as par value is $10 and current price is $53 309 $43 (53-10) per share will be added to additional paid in capital 310 So additional paid in capital will increase by 12900 (300 x 43] 312 common stock will increase by 300 x $10 3000 retained earnings will decrease by ( 300 x $53) 15900 314 new price of common stock = 53/1.1 = 48.18 316 BALANCE SHEET ASSETS LIABILITIES & EQUITY 318 CASH 20000 ACCOUNTS PAYABLE 20000 319 ACCOUNTS RECEIAVBLE 163000 LONG TERM DEBT 117000 INVENTORY 75000 COMMON STOCK 33000 30000 +3000] 321 ($10 PAR, 3300 SHARES OUTSTANDING) 322 PLANT & EQUIPMENT 210000 ADDITIONAL PAID IN CAPITAL 170900 [158000 + 12900] 323 RETAINED EARNINGS 127100 (143000-15900] 324 468000 468000 325 326 new price of common stock = 53/1.1 = 48.18 N STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS price quote EVA MVA LEVERAGED BUY SWAI Rea ferences 20 120% DOR . * 315 317 320 R 0 + ENG 06-11-2019