A company whose stock is selling for $45 has the following balance sheet: $\begin{array}{ll}
\text { Assets }\quad\$32,000\quad\quad\quad\text { Liabilities }\quad\$10,000\
\text { Common stock }&6,000\
\text { (\$6 par; 1,000 }\text { shares issued) }\\text { Additional paid-in capital }&2,000\\text { Retained eamings }&14,000
\end{array}$

a. Construct a new balance sheet showing a 3 for 1 stock split. What is the new price for the stock?

b. What would be the balance sheet if the firm paid a 10 percent stock dividend (instead of the stock split)?

Question

A company whose stock is selling for $45 has the following balance sheet: $\begin{array}{ll}
\text { Assets }\quad\$32,000\quad\quad\quad\text { Liabilities }\quad\$10,000\
\text { Common stock }&6,000\
\text { (\$6 par; 1,000 }\text { shares issued) }\\text { Additional paid-in capital  }&2,000\\text { Retained eamings }&14,000
\end{array}$
 ​ 
a. Construct a new balance sheet showing a 3 for 1 stock split. What is the new price for the stock?
​
b. What would be the balance sheet if the firm paid a 10 percent stock dividend (instead of the stock split)?
​

Quizplus · Accepted Answer

The Answer of A company whose stock is selling for $45 has the following balance sheet: $\begin{array}{ll}
\text { Assets }\quad\$32,000\quad\quad\quad\text { Liabilities }\quad\$10,000\
\text { Common stock }&6,000\
\text { (\$6 par; 1,000 }\text { shares issued) }\\text { Additional paid-in capital  }&2,000\\text { Retained eamings }&14,000
\end{array}$
 ​ 
a. Construct a new balance sheet showing a 3 for 1 stock split. What is the new price for the stock?
​
b. What would be the balance sheet if the firm paid a 10 percent stock dividend (instead of the stock split)?
​

A Company Whose Stock Is Selling for $45 Has the Following