Robinson's has 15,000 shares of stock outstanding with a market price of $36 per share. The balance sheet shows $330,000 in the common stock account and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split. What will the value of the retained earnings account be after the split?

Question

Quizplus · Accepted Answer

The value of the retained earnings account remains unchanged at $189,000 after a stock split. A stock split increases the number of shares outstanding but does not affect the balances in the common stock or retained earnings accounts.

Robinson's Has 15,000 Shares of Stock Outstanding with a Market