Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share.
$$\begin{array} { | l | r | }
\hline \begin{array} { l }
\text { Common stock, \$5 par, } 100,000 \text { shares } \
\text { authorized, } 40,000 \text { shares issued }
\end{array} & \$ 200,000 \
\hline \text { Paid in capital in excess of par - common } & 120,000 \
\hline \text { Retained earnings } & \underline { 290,000 } \
\hline \text { Total stockholders' equity } & \$ \underline { 610,000 } \
\hline
\end{array}$$ What would be the total paid-in capital after a 2-for-1 stock split?

Question

Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share.
$$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Common stock, \$5 par, } 100,000 \text { shares } \
\text { authorized, } 40,000 \text { shares issued }
\end{array} & \$ 200,000 \
\hline \text { Paid in capital in excess of par - common } & 120,000 \
\hline \text { Retained earnings } & \underline { 290,000 } \
\hline \text { Total stockholders' equity } & \$ \underline { 610,000 } \
\hline
\end{array}$$ What would be the total paid-in capital after a 2-for-1 stock split?

Quizplus · Accepted Answer

A 2-for-1 stock split doubles the number of shares but does not change the total paid-in capital. The total paid-in capital before the split is the sum of common stock ($200,000) and paid in capital in excess of par ($120,000), which equals $320,000. The stock split does not affect this total.

Gordon Corporation Reported the Following Equity Section on Its Current