The owners\' equity accounts for Southern Lights International are shown here: a

Question

The owners' equity accounts for Southern Lights International are shown here:
  

  
a-1. If the company declares a five-for-one stock split, how many shares will be outstanding? (Do not round intermediate calculations.)
  
New shares outstanding             
  
a-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
  
New par value           $   per share
  
b-1. If the company declares a one-for-six reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
  
New shares outstanding             
  
b-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
New par value           $   per share

Common stock ($.60 par value) $ 45,000 Capital surplus 340,000 Retained earnings 748,120 Total owners’ equity $ 1,133,120

Explanation / Answer

Solution a1:

Existing number of shares = $45,000 / 0.60 = 75000 shares

If the company declares a five-for-one stock split, new shares outstanding = 75000 * 5= 375000 shares

Solution a2:

New part value per share = $0.60 / 5 = $0.12 per share

Solution b1:

If the company declares a one-for-six reverse stock split, nos of shares outstanding = 75000 / 6 = 12500 shares

Solution b2:

New par value per share = $0.60 * 6 = $3.60 per share

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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