Stock split Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock...

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Stock split Firm Growth Industries current stockholders equity account is as follows: Preferred stock Common stock (400,000

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Answer 1

Answer #1

Given,

Common stock (4,00,000 shares at $4 par) = $16,00,000

Firm declared stock split of 2 for 1

Stock of $4 par will be converted into $2 par;4,00,000 shares will be converted into 8,00,000 shares

a.Change in par value =$4 - $2 = $2

b.number of shares outstanding after a 2 for 1 stock split =8,00,000 shares.

Note

1.Only common stock is split in to 2 for 1

2.Preferred stock is not split by the firm.

3.There will be no change in preferred stock,retained earnings and paid in capital in excess of par.

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Answer 2

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