2.99 See Answer

Question: For the company in Problem 2, show


For the company in Problem 2, show how the equity accounts will change if:
a. The company declares a 4-for-1 stock split. How many shares are outstanding now? What is the new par value per share?
b. The company declares a 1-for-5 reverse stock split. How many shares are outstanding now? What is the new par value per share?

Problem 2:
The owners’ equity accounts for Vulcano International are shown here:

Common stock ($.50 par value) …………….. $ 20,000
Capital surplus …………………………………….. 210,000
Retained earnings ………………………………… 587,300
Total owners’ equity …………………………… $ 817,300

a. If the company’s stock currently sells for $42 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.
b. If the company declared a 25 percent stock dividend, how would the accounts change?


2.99

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