Question

Pettygrove Company had 800,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $4,000,000, and Retained Earnings is $1,200,000. The company issues a 2-for-1 stock split. The market price of the stock is $14. What is the balance in the Common Stock account after this issuance

Answer 1

Answer:

$8,000,000

Explanation:

Balance in the Common Stock account = Number of hare after split * Par value of share

Balance in the Common Stock account = 800,000 * 2 * $10/2

Balance in the Common Stock account = $8,000,000

So, the balance in the Common Stock account after share split will be $8,000,000.