A company had 900,000 shares of $10 par value common stock outstanding. The amou

Question

A company had 900,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $4,500,000, and Retained Earnings is $1,350,000. The company issues a 2-for-1 stock split. The market price of the stock is $11. What is the balance in the Common Stock account after this issuance?

$18,000,000

$18,900,000

$13,500,000

$9,000,000

A company had 900,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $4,500,000, and Retained Earnings is $1,350,000. The company issues a 2-for-1 stock split. The market price of the stock is $11. What is the balance in the Common Stock account after this issuance?

Explanation / Answer

ans: D 9000000

only the number of shares and par value change.
before split: 900,000 shares x $10 par value= 9,000,000
after split: 1800,000 shares x $5 par value= 9,000,000

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