A company has 4 million common shares authorized,2.5 million shares issued and 100,000 treasury shares.The par value is $1 per share and the market price is $30 when the company declares a 4-for-1 stock split.Which of the following is correct?
A)There will be a transfer of $2.4 million from retained earnings to contributed capital.
B)Only the shares outstanding will quadruple to 49.86 million and the par value will be reduced to $.25 per share.
C)The shares authorized, issued, outstanding, and held in treasury will all quadruple while the par value will be reduced to $.25 per share.
D)The company will be unable to declare a 4-for-1 split because they do not have enough authorized shares to issue the needed 49.86 million shares.

Question

Quizplus · Accepted Answer

Four shares of $.25 par value common stock will be issued for every share of $1 par value common stock.

A Company Has 4 Million Common Shares Authorized,2