Before a three-for-one stock split,the shares outstanding were 4,000 shares at $9 par.After the split,what was the par value per share and number of shares?

Question

Quizplus · Accepted Answer

A three-for-one stock split means that each share is split into three smaller shares. So, the number of shares outstanding will increase by three times the original amount. In this case, 4,000 shares will become 12,000 shares after the split. 
The par value per share will be reduced by the same ratio as the split, which means it will be divided by three in this case. So, the par value per share will be $9/3 = $3 after the split. Therefore, the correct answer is B, 12,000 shares at $3 per share.

Before a Three-For-One Stock Split,the Shares Outstanding Were 4,000 Shares