1. Stark Industries' stock currently sells for $150 a share. You own 200 shares of the stock. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?
A. You will have 400 shares of stock, and the stock will trade at or near $75 a share.
B. You will have 200 shares of stock, and the stock will trade at or near $60 a share.
C. You will have 100 shares of stock, and the stock will trade at or near $150 a share.
D. You will have 100 shares of stock, and the stock will trade at or near $60 a share.
2. Heller Company offers an unconditional return policy to its customers. During the current period, the company records total sales of $850,000, with a cost of merchandise to Heller of $340,000. Based on past experience, Heller Company expects 4% of sales to be returned.
How much gross profit will Heller Company recognize for the current period?
A. $816,000
B. $510,000
C. $850,000
D. $360,400
E. $489,600