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.)


     

Homework Answers

Answer #1

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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