Question

# The owners' equity accounts for Vidi International are shown here:   Common stock (\$.60 par value) \$...

 The owners' equity accounts for Vidi International are shown here:
 Common stock (\$.60 par value) \$ 45,000 Capital surplus 365,000 Retained earnings 798,120 Total owners’ equity \$ 1,208,120

 a-1. If the company declares a three-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-four 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. New shares outstanding a-2. New par value \$ per share b-1. New shares outstanding b-2. New par value \$ per share

Number of shares outstanding before stock split = Common stock / Par value per share
Number of shares outstanding before stock split = \$45,000 / \$0.60
Number of shares outstanding before stock split = 75,000

The company declares a 3-for-1 stock split.

New shares outstanding = 75,000 * 3
New shares outstanding = 225,000

New par value per share = \$0.60 * (1/3)
New par value per share = \$0.20

The company declares a 1-for-4 reverse stock split.

New shares outstanding = 75,000 * (1/4)
New shares outstanding = 18,750

New par value per share = \$0.60 * (4/1)
New par value per share = \$2.40