Robinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share. The balance sheet shows $15,000 in the common stock account,$315,000 in the capital in excess of par account,and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split. What will the value of the common stock account be after the split?

Question

Quizplus · Accepted Answer

After the stock split, the total number of shares outstanding will be:
15,000 * (3/2) = 22,500

Since the par value remains the same at $1.00 per share, the common stock account will still have a value of $15,000. This is because the common stock account represents the par value of the shares outstanding.

Therefore, the value of the common stock account after the split will still be $15,000.

Robinson's Has 15,000 Shares of Stock Outstanding with a Par