The Retail Outlet has 6,000 shares outstanding with a par value of £1.00 per share.The current market value of the firm is £420,000.The statement of financial position shows the additional paid in capital 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?

Question

Quizplus · Accepted Answer

A stock split does not affect the retained earnings account balance. It only increases the number of shares and adjusts the par value per share.

The Retail Outlet Has 6,000 Shares Outstanding with a Par