The owners\' equity accounts for Alexander International are shown here. If Alex
ID: 2654473 • Letter: T
Question
The owners' equity accounts for Alexander International are shown here.
If Alexander declares a five-for-one stock split, how many shares are outstanding now?
What is the new par value per share? (Round your answer to 3 decimal places. (e.g., 32.161))
If Alexander declares a one-for-four reverse stock split, how many shares are outstanding now?
What is the new par value per share? (Round your answer to 2 decimal places. (e.g., 32.16))
Common stock ($0.50 par value) $ 42,500 Capital surplus 355,000 Retained earnings 778,120 Total owners’ equity $ 1,175,620
Explanation / Answer
Answer:
a-1
Number of shares before Stock split (42500 / 0.50)
85000
New shares outstanding after split = 85000*5
425000
a-2
Existing par value per share before stock split
$0.50
New par value per share after stock split = 0.50 /5
$0.10
b-1
Number of shares before Stock split (42500 / 0.50)
85000
New shares outstanding after split = 85000/4
21250
b-2
Existing par value per share before stock split
$0.50
New par value per share after stock split = 0.50*4
$2.00
a-1
Number of shares before Stock split (42500 / 0.50)
85000
New shares outstanding after split = 85000*5
425000
a-2
Existing par value per share before stock split
$0.50
New par value per share after stock split = 0.50 /5
$0.10
b-1
Number of shares before Stock split (42500 / 0.50)
85000
New shares outstanding after split = 85000/4
21250
b-2
Existing par value per share before stock split
$0.50
New par value per share after stock split = 0.50*4
$2.00
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