Asked by Camille Esselin on May 18, 2024
Verified
Robinson's has 15,000 shares of stock outstanding with a market price of $36 per share. The balance sheet shows $330,000 in the common stock account and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split. What will the value of the common stock account be after the split?
A) $189,000
B) $220,000
C) $330,000
D) $495,000
E) $503,000
Stock Split
A corporate action to increase the number of outstanding shares through a proportional division, reducing the stock price accordingly.
- Decode the procedure and economic impacts of stock splits and how they affect the per-share price in the market.
- Analyze the effects of corporate initiatives like stock repurchases on the market valuation of each share.
Verified Answer
RH
Rolla HindawiMay 20, 2024
Final Answer :
C
Explanation :
The value of the common stock account remains unchanged at $330,000 after a stock split. Stock splits increase the number of shares outstanding but do not affect the total value of the equity accounts on the balance sheet.
Learning Objectives
- Decode the procedure and economic impacts of stock splits and how they affect the per-share price in the market.
- Analyze the effects of corporate initiatives like stock repurchases on the market valuation of each share.