Nutritious Pet Food Company’s board of directors declares a 2-for-1 stock split on June 30 when the stock’s market value per share is $30. At that time, there are 10,000 shares of$1 par value common stock outstanding (none held in treasury). What is the new par value of the shares and how many shares are outstanding after the split?

FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

Solutions

Chapter
Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 14, Problem 14EB
Textbook Problem
1 views

Nutritious Pet Food Company’s board of directors declares a 2-for-1 stock split on June 30 when the stock’s market value per share is $30. At that time, there are 10,000 shares of$1 par value common stock outstanding (none held in treasury). What is the new par value of the shares and how many shares are outstanding after the split?

To determine

To calculate:

The new par value of shares and total number of shares outstanding after the split.

Introduction:

Stocks referto the securities of a company that an investor buys in order to earn a regular return and capital appreciation in long run.

Explanation of Solution

Formula to calculatethe new par value of equity:

NewParValue=OriginalParValue2

Substitute, $1 for original par value in the above formula. NewParValue=$12=$0.50 Therefore, new par value of share is$0.50.

Formula to calculate the number of shares outstanding after split:

Numberof SharesOutstandingAfterSplit=

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started