The owners' equity accounts for Freya International are shown here.
Common stock ($.50 par value) = $38,000
Capital surplus = 330,000
Retained earnings = 728,120
Total owners' equity = $1,096,120
a-1 If Freya declares a two-for-one stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
a-2 What is the new par value per share? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.)
b-1 If Freya declares a one-for-four reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.)
b-2 What is the new par value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Stock Split refers to the splitting up of one common stock into more than 1 parts. It is generally done by the companies which see a substantial increase in per stock value without affecting the total market value of the company
Answer and Explanation:
Number of shares currently = 38000 / 0.50 = 76,000 shares
One stock is split into two.
Hence Number of shares outstanding = 76000 x 2...
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from Finance 101: Principles of FinanceChapter 16 / Lesson 7
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