Question

# S17-03 Stock Splits [LO3] The owners’ equity accounts for Vidi International are shown here   Common stock...

S17-03 Stock Splits [LO3]

 The owners’ equity accounts for Vidi International are shown here
 Common stock (\$.50 par value) \$ 25,000 Capital surplus 215,000 Retained earnings 642,700 Total owners’ equity \$ 882,700
 a-1. If the company declares a four-for-one stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
 a-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
 b-1. If the company declares a one-for-five reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
 b-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

a-1. The number of shares outstanding now

The number of shares outstanding now = [\$25,000 / \$0.50] x [4/1]

= 50,000 Shares x [4/1]

= 200,000 Shares

a-2. The new par value per share

The new par value per share = \$0.50 per share / [4/1]

= \$0.125 per share

b-1. The number of shares outstanding now

The number of shares outstanding now = [\$25,000 / \$0.50] x [1/5]

= 50,000 Shares x [1/5]

= 10,000 Shares

b-2. The new par value per share

The new par value per share = \$0.50 per share / [1/5]

= \$2.50 per share

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