The owners' equity accounts for Buel Industries include common stock of $24,000 with a $1 par value, capital in excess of par value of $287,000, and retained earnings of $408,500. How many shares will be outstanding and what will be the par value per share if the firm declares a reverse stock split of one-for-four?

Question

Quizplus · Accepted Answer

A one-for-four reverse stock split will reduce the number of outstanding shares while increasing the par value per share. To find the new number of outstanding shares, we divide the current number of outstanding shares (24,000) by 4, resulting in 6,000 shares. The new par value per share will be the current par value ($1) multiplied by 4, resulting in $4. Therefore, the answer is (B) 6,000; $4.00.

The Owners' Equity Accounts for Buel Industries Include Common Stock