Forward Stock Split On September 1, Oxford Company has 250,000 shares of $15 par

Question

Forward Stock Split On September 1, Oxford Company has 250,000 shares of $15 par value common stock that are issued and outstanding. The general ledger shows the following account balances relating to the common stock: Common stock $3,750,000 Paid-in capital in excess of par value 2,250,000 On September 2, Oxford splits its stock 3-for-2 and reduces the par value to $10 per share. How many shares of common stock are issued and outstanding immediately following the stock split? What is the balance in the Common Stock account immediately following the stock split?

Explanation / Answer

1a) Number of shares outstanding =250,000 * 3 /2 = 375000shares

b)Amount in common stock = 375,000 * 10 = $ 3,750,000

2)

Date Title debit credit a Retained earnings   (40000*17) 680,000 common stock dividend payable (40000*10) 400,000 Additional paid in capital (40000*7) 280,000 [being stock dividend declared] b common stock dividend payable 400,000 Common stock 400,000

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