Double Vision,Inc.had 10,000 shares issued and outstanding of its $1 par value common stock.At December 31,Common Stock equaled $10,000,Retained Earnings equaled $20,000 and Total stockholders' equity equaled $50,000 prior to a 2-for-1 stock split.As a result of a 2-for-1 stock split:
A) par value equals $0.50.
B) the number of shares outstanding equals 5,000.
C) the common stock equals $20,000
D) Retained Earnings equals $40,000.

Question

Quizplus · Accepted Answer

In a 2-for-1 stock split, the par value of the stock is halved, so the new par value is $0.50. The number of shares doubles to 20,000, but the common stock value remains the same at $10,000, and retained earnings are unaffected by the stock split.