The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, 2018, is as follows.     Stockholders’ Equity             Paid-in capital             Preferred stock,? par value, 6% cumulative,             210,000 shares authorized, 51,000 shares issued and outstanding $ 510,000         Common stock, $20 stated value, 260,000 shares authorized, 51,000?? shares issued and outstanding   1,020,000         Paid-in capital in excess of par—Preferred   41,000         Paid-in capital in excess of stated value—Common   204,000         Total paid-in capital         1,775,000   Retained earnings         360,000   Treasury stock, 5,000 shares         (36,000 ) Total stockholders’ equity       $ 2,099,000     Note: The market value per share of the common stock is $42, and the market value per share of the preferred stock is $23.   Required What was the average issue price per share (price for which the stock was issued) of the common stock? If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares will be outstanding after the split? What amount will be transferred from the retained earnings account because of the stock split? Theoretically, what will be the market price of the common stock immediately after the stock split?

Question

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, 2018, is as follows.

 

 
Stockholders’ Equity            
Paid-in capital            
Preferred stock,? par value, 6% cumulative,            
210,000 shares authorized, 51,000 shares issued and outstanding $ 510,000        
Common stock, $20 stated value, 260,000 shares authorized, 51,000?? shares issued and outstanding   1,020,000        
Paid-in capital in excess of par—Preferred   41,000        
Paid-in capital in excess of stated value—Common   204,000        
Total paid-in capital         1,775,000  
Retained earnings         360,000  
Treasury stock, 5,000 shares         (36,000 )
Total stockholders’ equity       $ 2,099,000  
 

Note: The market value per share of the common stock is $42, and the market value per share of the preferred stock is $23.

 

Required

  1. What was the average issue price per share (price for which the stock was issued) of the common stock?

  2. If Mann Equipment Company declared a 2-for-1 stock split on the common stock, how many shares will be outstanding after the split? What amount will be transferred from the retained earnings account because of the stock split? Theoretically, what will be the market price of the common stock immediately after the stock split?

 

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