Forward Stock Split On March 1 of the current year, Sentry Corporation has 460,0

Question

Forward Stock Split

On March 1 of the current year, Sentry Corporation has 460,000 shares of $22 par value common stock that are issued and outstanding. The general ledger shows the following account balances relating to the common stock:

On March 2, Sentry Corporation splits its stock 2-for-1 and reduces the par value to $11 per share.

a. How many shares of common stock are issued and outstanding immediately following the stock split?

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b. What is the balance in the Common Stock account immediately following the stock split?

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c. What is the balance in the Paid-in Capital in Excess of Par Value account immediately following the stock split?

$Answer

Explanation / Answer

a) Common stock issued and outstanding immediately following the stok split = 460000*2 = 920000 shares

b) Balance in the common stock account immediately following the stock split = 920000*11 = 10120000

c) Paid in capital in excess of par value immediately following the stock split = 4000000

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