Mario's has 18,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $33 a share. The balance sheet shows $18,000 in the common stock account, $285,000 in the paid in surplus account, and $162,000 in the retained earnings account. The firm just announced a 5-for-3 stock split. What will the paid in surplus account value be after the split?

Question

Quizplus · Accepted Answer

A stock split does not affect the paid in surplus account. It only changes the number of shares and the par value per share. Therefore, the paid in surplus account remains at $285,000 after the split.

Mario's Has 18,000 Shares of Stock Outstanding with a Par