Stock Split Birch Enterprises reported the following information: common stock,

Question

Stock Split Birch Enterprises reported the following information: common stock, $3 par; 750,000 shares authorized; 400,000 shares issued and outstanding. Required: What is the typical effect of a 4-for-1 stock split on the information Birch Enterprises reports above? If the market value of the common stock is $600 per share when the stock split is declared, what would you expect the approximate market value per share to be immediately after the split? Given the information provided above, calculate the effect on each of the following items. If required, round your answers to two decimal places.

Authorized shares

shares Issued

Market value per share

Par value per share

Explanation / Answer

Total shares authorized are 750,000 $3par

Total shares issued are 400,000 $3 par

4-for 1 stock split will increase the shares issued to 400,000*4 = 1,600,000 shares at $.75

Authorized shares will also increase by 3,00,000 shares.

Authorized shares 3,000,000

Issued shares 1,600,000

Par value per share $0.75

Market value per share $150 per share.

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