At the time that Kirby Company issued a 2-for-1 stock split, the company had 1,0
ID: 2557540 • Letter: A
Question
At the time that Kirby Company issued a 2-for-1 stock split, the company had 1,000 shares of $8 par value common stock outstanding. Stockholders' equity also contained $15,000 of additional paid-in capital and $16,000 of retained earnings. Immediately after the stock split the:
number of outstanding shares of common stock would be 16,000.
amount of paid-in capital in excess of par-common would be equal to $30,000.
balance in the retained earnings account would amount to $8,000.
balance in the common stock account would amount to $8,000.
Explanation / Answer
Answer to the above question is option D. i.e. balance in the common stock account would amount to $8,000.
As in the case of stock split, there is no effect on the amount of retained earnings and amount of additional paid in capital, stock split only effects number of common stock outstanding and par value of common stock.
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