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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Stock split
Using the data from E8-22. indicate the effects on ne assets and EPS of the stock spilt.

To determine

Concept Introduction:

Stock split:

Stock split refers to the dividing one share into two of more shares. It is usually done to make the share available for small investor with smaller value. A stock split does not affect the total stockholder's equity and it also does not require any journal entry.

Balance Sheet:

The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Basic Earnings per share:

The Basic Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula:

  Basic Earnings per share=Net Income - Preferred DividendWeighted Average Common Shares Outstanding

   Net Income available to common stockholder = Net income  Preferred Dividend

To Indicate:

The effect of Stock Split on Net Assets and Earnings per share

Explanation

Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities...

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