On June 30, 2011, Samson Corporation\'s common stock is priced at $29 per share

Question

On June 30, 2011, Samson Corporation's common stock is priced at $29 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows.


Common stock—$6 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 240,000
Paid-in capital in excess of par value, common stock $100,000
Retained earnings $340,000
Total stockholders' equity $ 680,000

Assume that the company implements a 3-for-2 stock split. Answer these questions about stockholders' equity as it exists after issuing the new shares.

a)What is the retained earnings balance?

b)What is the amount of total stockholders' equity?

c)How many shares are outstanding?

Explanation / Answer

A stock split only changes the shares outstanding, it doesn't affect stockholders equity or retained earnings. So a and b do not change. The shares outstanding are 40,000*3/2= 60,000.

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