Help Save Kinmi Financial Corporation is the parent company of Kinmi Bank. The c
ID: 2509974 • Letter: H
Question
Help Save Kinmi Financial Corporation is the parent company of Kinmi Bank. The company's stock split was announced in the following wire: LOS ANGELES (BUSINESS WIRE) Jan. 20-Kinmi Financial Corporation (Nasdaq), announced that the Board of Directors has approved a two-for-one stock split, to be effected in the form of a 100 percent common stock dividend. Kinmi Financial Corporation stockholders of record at the close of business on January 31 will recelve one additional share of common stock for every share of common stock then held. Distribution of additional shares issued as a result of the split is expected to occur on or about February 15. At the time of the stock split, 31.5 million shares of common stock, $.001 par per share, were outstanding Required: 1. Prepare the journal entry, if any, that Kinmi recorded at the time of the stock split es 3. If Kinmi's stock price had been $43 at the time of the split, what would be its approximate value after the split (other things equal)? Complete this question by entering your answers in the tabs below. Prepare the journal entry, if any, that Kinmi recorded at the time of the stock split. (If no entry is required for a on/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) Journal entry worksheet ?prev 11 of 15Explanation / Answer
Solution: Event General Journal Debit Credit 1. Paid-in capital - excess of par 31,500 Common stock 31,500 Working Notes: Current shares outstanding is 31.5 million and two for one stock split , means one additional shares will be issued current share holders that is 31.5 million new shares will be issued of $0.001 par value Paid-in capital - excess of par 31,500 Common stock 31,500 [31,500,000 x $0.001 = $31,500] 3. Approximate value per share $ 21.5 Working Notes: Approximate value per share after stock split will be equal to half of price before stock split $43 as after stock split no of shares outstanding becomes twice and market capitalization of company remain same , hence stock price after stock split = Market price per share before split/ Split ratio =$43 /(2/1) =$21.5 Please feel free to ask if anything about above solution in comment section of the question.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.