Identifying, Analyzing, and Explaining the Effects of a stock Split
On March 1 of the current year, Zhang Company has 500,000 shares of $20 par value common stock that are issued and outstanding. Its balance sheet shows the following account balances relating to common stock.
Common stock…………………………………..$10,000,000
Paid-in capital in excess of par value……………$5,300,00
On March 2, Zhang Company splits its common stock 2-for-1 and reduces the par value to $10 per share.
a. How many shares of common stock are issued and outstanding immediately after the stock split?
b. What is the dollar balance in the common stock account immediately after the stock split?
c. What is the dollar balance in the paid-in capital in excess of par value account immediately after the stock split?