Donaghue Company announced a 2-for-1 stock split on its common stock. before the

Question

Donaghue Company announced a 2-for-1 stock split on its common stock. before the announcement, there were 150,000 shares of $10 par common stock outstanding. Determine how many shares of common stock will be outstanding after the stock split. What will be the par value of each share? What effect does the stock split have on total shareholders equity?

_________shares of common stock outstanding after the split

the par value of each share after the split will be ________

What effect does the stock split have on toatl shareholders' equity

A. decreases total shareholders equity

B. no effect

C. increase

Explanation / Answer

2-for-1 stock split on its common stock MEANS EVERY ONE SHARE WOULD BE CONVERETED INTO TWO SHARES

shares of common stock outstanding after the split

= 150000*2

=300000 SHARES

the par value of each share after the split will be = 10/2

=RS. 5 PER SHARE

What effect does the stock split have on toatl shareholders' equity

=NO EFFECT

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