Reverse Stock Split Titanium Metals Company had 28,000,000 shares of $0.02 par v

Question

Reverse Stock Split Titanium Metals Company had 28,000,000 shares of $0.02 par value common stock outstanding which had been sold for an aggregate amount of $300,000,000. The company's shares are traded on the New York Stock Exchange, which has a minimum listing price of $1 per share. Recently, the company's common stock has been trading on the exchange below $1 per share, and the exchange has notified the company that its common stock would be delisted in 30 days if the stock price did not rebound above its minimum listing price. In response to this notification, Titanium Metals authorized a 1-for-10 reverse stock split. Following the reverse stock split: 6 n B-Principles counting r 2 21 26 a. How many common shares will be outstanding? Finis b. What will be the new par value per share? er 6 er er 8 c. How will the reverse stock split be recorded in the company's accounts? ter Memorandum Check ter 11

Explanation / Answer

a.how many shares will be out standing?

2,800,000 shares.

working: since it is a 1 for 10 stock split

we shall have a 28,000,000 * 1 /10 shares remaining =>2,800,000.

b.what will be the new par value per share?

$0.20.

new par value per share = old par value * (total shares given for 1 share)

=>$0.02 * 10

=>$0.20.

c.reverse stock split be recorded in company's accounts?

=>memorandum.

Only a memorandum entry is recorded, since there will be no change in the common stock account balance.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.