Callisto began 2000 with 100,000 shares of $3 par common stock.The firm declared a 3-for-1 stock split on March 1,2010.How will the stock split affect Callisto's stockholders' equity?

Question

Quizplus · Accepted Answer

A stock split does not affect the total value of the stockholders' equity but merely increases the number of outstanding shares and reduces the par value per share. In this case, each shareholder holds three times the number of shares they held before the split, and the par value of the shares reduces from $3 to $1. Therefore, the split has no effect on Callisto's stockholders' equity.

Callisto Began 2000 with 100,000 Shares of $3 Par Common