17. .A corporation has 45,561 shares of $30 par stock outstanding that has a cur

Question

17. .A corporation has 45,561 shares of $30 par stock outstanding that has a current market value of $342 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

a.$85.50

b.$1,368.00

c.$7.50

d.$312.00

18.

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 per share. The effect of the declaration and issuance of the stock dividend is to

a.increase retained earnings, decrease common stock, and increase paid-in capital

b.decrease retained earnings, increase common stock, and decrease paid-in capital

c.increase retained earnings, decrease common stock, and decrease paid-in capital

d.decrease retained earnings, increase common stock, and increase paid-in capital

Explanation / Answer

17) Market value of stock = 342/4 = 85.50

so answer is a) $85.50

18) If stock dividend declared and issued so retained eanring will decrease and common stock and paid in capital should increase.

so answer is d) decrease retained earnings, increase common stock, and increase paid-in capital

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