Callisto began 2008 with 100,000 shares of $3 par common stock.The firm declared a 3-for-1 stock split on March 1,2008.How will the stock split affect Callisto's stockholders' equity?
A)$300,000 will be transferred from paid-in capital to retained earnings
B)$300,000 will be transferred from retained earnings to paid-in capital
C)neither total paid-in capital nor retained earnings will change
D)stockholders' equity will be decreased by $300,000

Question

Quizplus · Accepted Answer

A stock split does not affect the total paid-in capital or retained earnings. It increases the number of shares while decreasing the par value per share proportionally, leaving the total stockholders' equity unchanged.

Callisto Began 2008 with 100,000 Shares of $3 Par Common