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) \$ 37,500 Capital surplus 325,000 Retained earnings 718,120 Total owners’ equity \$ 1,080,620

 a-1. If the company declares a two-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.)

Before stock split:

Number of shares outstanding = Common stock / Par value per share
Number of shares outstanding = \$37,500 / \$0.60
Number of shares outstanding = 62,500

If the company declares a two-for-one stock split, then 2 stocks are issued for each stock. This will double the number of stock outstanding and half the par value per share.

Number of shares outstanding = 2 * 62,500
Number of shares outstanding = 125,000

Par value per share = \$0.60 / 2
Par value per share = \$0.30

Number of shares outstanding = 62,500 / 4
Number of shares outstanding = 15,625

Par value per share = \$0.60 * 4
Par value per share = \$2.40