The stockholders' equity section of the balance sheet of the XYZ Corp. is as follows: $$\begin{array} { l l }
\text { Common stock (\$6 par) } & \$ 24,000,000 \
\text { Retained earnings } & \$ 125,000,000 \
\text { Total } &\$ 149,000,000
\end{array}$$ If the company now splits its stock 3-for-1, which of the following is correct?

Question

The stockholders' equity section of the balance sheet of the XYZ Corp. is as follows: $$\begin{array} { l l } 
\text { Common stock (\$6 par) } & \$ 24,000,000 \
\text { Retained earnings } & \$ 125,000,000 \
\text { Total } &\$ 149,000,000 
\end{array}$$ If the company now splits its stock 3-for-1, which of the following is correct?

Quizplus · Accepted Answer

In a 3-for-1 stock split, the par value per share is divided by 3, reducing it from $6 to $2.

The Stockholders' Equity Section of the Balance Sheet of the XYZ