Question 1

The Tinslow Co.has 125,000 shares of stock outstanding at a market price of $93 a share.The company has just announced a 7-for-3 stock split.What will the market price per share be after the split?

Accepted Answer

A 7-for-3 stock split means that for every 3 shares a shareholder owns, they will receive an additional 7 shares.

So, if there were originally 125,000 shares of stock outstanding, there will now be:

(125,000 x 7) / 3 = 291,666.67 shares outstanding

But the total value of the stock remains the same, since it's just being divided into more shares.

So, the new market price per share will be:

$93 / (7/3) = $39.86

Therefore, the best choice is B.

Question 2

The Retail Outlet has 6,000 shares of stock outstanding with a par value of $1.00 per share.The current market value of the firm is $420,000.The balance sheet shows the capital in excess of par account value of $136,000 and retained earnings of $234,000.The company just announced a 2-for-1 stock split.What will the retained earnings account balance be after the split?

Accepted Answer

The answer of The Retail Outlet has 6,000 shares of...

Question 3

The Tinslow Co.has 125,000 shares of stock outstanding at a market price of $93 a share.The company has just announced a 5-for-3 stock split.How many shares of stock will be outstanding after the split?

Accepted Answer

A 5-for-3 stock split means that for every 3 shares of stock, shareholders will receive an additional 2 shares, thus increasing the total number of shares by 5/3 or 1.67 times the original amount. So, after the stock split, the number of outstanding shares would be: 125,000 x 1.67 = 208,333 shares. Therefore, the correct answer is E.

Question 4

Edie's Health and Beauty Supply has 135,000 shares of stock outstanding with a par value of $1 per share and a market value of $5 a share.The company has retained earnings of $76,500 and capital in excess of par of $340,000.The company just announced a 1-for-5 reverse stock split.How many shares of stock will be outstanding after the split?

Accepted Answer

A 1-for-5 reverse stock split means that for every 5 shares of stock previously owned by a shareholder, they will now only own 1 share. 
Edie's Health and Beauty Supply has 135,000 shares outstanding, so after the split, the total number of shares will be 135,000/5 = 27,000 shares. Therefore, the correct answer is A) 27,000 shares.

Question 5

The Retail Outlet has 6,000 shares of stock outstanding with a par value of $1.00 per share.The current market value of the firm is $480,000.The balance sheet shows the capital in excess of par account value of $136,000 and retained earnings of $234,000.The company just announced a 2-for-1 stock split.What will the market price per share be after the split?

Accepted Answer

Before the stock split, the total value of the company was 6,000 shares x $80 per share = $480,000. After the split, the number of outstanding shares will double to 12,000 shares.

To find the new market price per share, we divide the total value by the new number of shares:

$480,000 total value / 12,000 shares = $40 per share

Therefore, the market price per share after the split will be $40.

Question 6

On May 18^th,you purchased 1,000 shares of Sanders stock.On June 5^th,you sold 300 shares of this stock for $21 a share.You sold an additional 400 shares on July 8^th at a price of $22.50 a share.The company declared a $.15 per share dividend on June 25^th to holders of record as of Thursday,July 10^th.This dividend is payable on July 31^st.How much dividend income will you receive on July 31^st as a result of your ownership of BuyLo stock?

Accepted Answer

You held 300 shares on the record date of July 10th, so you will receive dividends for those shares. 300 shares x $0.15 = $45.

Question 7

Bob's Auto Group has 25,000 shares of stock outstanding at a market price of $5.50 a share.What will the market price per share be if the company does a 1-for-5 reverse stock split?

Accepted Answer

The answer of Bob's Auto Group has 25,000 shares of...

Question 8

Robinson's has 16,000 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 $16,000 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.How many shares of stock will be outstanding after the split?

Accepted Answer

A 3-for-2 stock split means that for every 2 shares currently held, shareholders will receive 3 shares. Therefore, the number of shares after the split will be 16,000 * (3/2) = 24,000 shares.

Question 9

Robinson's has 18,500 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 $18,500 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?

Accepted Answer

The answer of Robinson's has 18,500 shares of stock outstanding...

Question 10

The High-Div Company is paying a $1.50 per share dividend today.There are 200,000 shares outstanding with a par value of $1.00 per share.As a result of this dividend,the:

Accepted Answer

The dividend payment of $1.50 per share for 200,000 shares results in a total dividend of $300,000, which decreases retained earnings by this amount.

Question 11

Bruno's has 6,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share.The balance sheet shows $6,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account.The firm just announced a 50% (large)stock dividend.What is the value of the common stock account after the dividend?

Accepted Answer

A 50% stock dividend means that shareholders will receive an additional 50% of their current shares of stock. In this case, Bruno's will issue 3,000 additional shares of stock (50% of 6,000). After the dividend, there will be a total of 9,000 shares outstanding (6,000 + 3,000).

To find the new value of the common stock account, we need to divide the total par value of the stock (now $9,000, since there are 9,000 shares outstanding) by the par value per share ($1).

$9,000 / $1 = $9,000

Therefore, the value of the common stock account after the dividend will be $9,000, which is answer choice C.

Question 12

Edie's Health and Beauty Supply has 125,000 shares of stock outstanding with a par value of $1 per share and a market value of $5 a share.The company has retained earnings of $76,500 and capital in excess of par of $340,000.The company just announced a 1-for-5 reverse stock split.What will the par value per share be after the split?

Accepted Answer

The answer of Edie's Health and Beauty Supply has 125,000...

Question 13

Bruno's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share.The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account,and $32,500 in the retained earnings account.The firm just announced a 50% (large)stock dividend.What is the market value per share after the dividend?

Accepted Answer

The answer of Bruno's has 7,000 shares of stock outstanding...

Question 14

Robinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $24 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 market price per share be after the split?

Accepted Answer

After the 3-for-2 stock split, the number of shares outstanding will be:
15,000 * (3/2) = 22,500
The total value of equity will remain the same:
15,000 + 315,000 + 189,000 = $519,000
The new par value per share will be:
$15,000 / 22,500 = $0.67
The market price per share will adjust accordingly:
$24 / (3/2) = $16

Question 15

Bruno's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share.The balance sheet shows $7,000 in the common stock account,$87,000 in the capital in excess of par account and $32,500 in the retained earnings account.The firm just announced a 50% (large)stock dividend.What is the value of the capital in excess of par account after the dividend?

Accepted Answer

In a large stock dividend, the par value of the new shares is transferred from retained earnings to the common stock account. The capital in excess of par account remains unchanged. Thus, the value of the capital in excess of par account after the dividend is still $87,000.

Question 16

Bruno's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share.The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account.The firm just announced a 50% (large)stock dividend.What is the value of the retained earnings account after the dividend?

Accepted Answer

The answer of Bruno's has 7,000 shares of stock outstanding...

Question 17

Edie's Health and Beauty Supply has 125,000 shares of stock outstanding with a par value of $1 per share and a market value of $3.50 a share.The company has retained earnings of $76,500 and capital in excess of par of $340,000.The company just announced a 1-for-5 reverse stock split.What will the market value per share be after the split?

Accepted Answer

A 1-for-5 reverse stock split means that every 5 shares will be combined into 1 share. This reduces the number of shares outstanding by a factor of 5, increasing the market value per share by the same factor. The original market value per share is $3.50, so after the split, it will be $3.50 * 5 = $17.50.

Question 18

The Retail Outlet has 6,000 shares of stock outstanding with a par value of $1.00 per share.The current market value of the firm is $420,000.The balance sheet shows the capital in excess of par account value of $136,000 and retained earnings of $234,000.The company just announced a 2-for-1 stock split.What will the common stock account balance be after the split?

Accepted Answer

A 2-for-1 stock split means that each shareholder will receive two shares for every one share they own. Since the company has 6,000 shares outstanding, after the split, there will be 12,000 shares outstanding. However, the total value of the company remains the same at $420,000.

To find the new value per share, we divide the total value of the company by the number of outstanding shares after the split:
$420,000 / 12,000 shares = $35.00 per share

Since the par value remains the same at $1.00 per share, the common stock account balance after the split will be:
$35.00 x 6,000 shares = $210,000

Therefore, the total common stock account balance after the split and the distribution of the additional shares will be $6,000.

Question 19

The common stock of Margot,Inc.is selling for $63 a share.The par value per share is $1.Currently,the firm has a total market value of $94,500.How many shares of stock will be outstanding if the firm does a 2-for-1 stock split?

Accepted Answer

The answer of The common stock of Margot,Inc.is selling for...

Question 20

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 paid in surplus account value be after the split?

Accepted Answer

A stock split does not affect the total paid-in surplus (capital in excess of par) account value. Therefore, the value remains $315,000 after the split.

Quiz 16: Dividend and Other Payouts

The Tinslow Co.has 125,000 shares of stock outstanding at a market price of $93 a share.The company has just announced a 7-for-3 stock split.What will the market price per share be after the split?

The Tinslow Co.has 125,000 shares of stock outstanding at a market price of $93 a share.The company has just announced a 5-for-3 stock split.How many shares of stock will be outstanding after the split?

Bob's Auto Group has 25,000 shares of stock outstanding at a market price of $5.50 a share.What will the market price per share be if the company does a 1-for-5 reverse stock split?

The High-Div Company is paying a $1.50 per share dividend today.There are 200,000 shares outstanding with a par value of $1.00 per share.As a result of this dividend,the:

The common stock of Margot,Inc.is selling for $63 a share.The par value per share is $1.Currently,the firm has a total market value of $94,500.How many shares of stock will be outstanding if the firm does a 2-for-1 stock split?