Twin Towns,Inc., was authorized to issue 300,000 shares of common stock and oringinally issued 100,000 shares of $10 par value stock at $18 per share. Subsequently, 25,000 shares were repurchased at $20, of which 10,000 were subsequently resold at $23.
Assume the company's retained earnings balance is $120,000.
a. prepare the stockholders equity section of Twin Town's balance sheet , including all apropriate disclosures.
b. briefly explain how the declaration and distribution of a 2-for-1 stock split subsequent to the above transactions would affect the stockholders' equity section you have prepared.