Mario's has 24,000 shares of stock outstanding with a par value of $1 per share and a market price of $11.40 a share. The balance sheet shows $68,600 in the capital in excess of par value account, and $34,910 in the retained earnings account. The company just announced a stock split of three-for-one. What will be the capital in excess of par account value after the split?

Question

Quizplus · Accepted Answer

The capital in excess of par value account remains unchanged at $68,600 after a stock split. A stock split increases the number of shares and decreases the market price per share proportionally, but it does not affect the par value per share or the total amount recorded in the capital in excess of par value account.

Mario's Has 24,000 Shares of Stock Outstanding with a Par