The owners equity accounts for Southern Lights International

The owners\' equity accounts for Southern Lights International are shown here: Common stock (.50 par value)38,000 330,000 728,120 $1,096,120 Capital surplus Retained earnings Total owners\' equity a-1. If the company declares a two-for-one stock split, how many shares will be outstanding? (Do not round intermediate calculations.) New shares outstanding a-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g. 32.161.) New par valueper share b-1. If the company declares a one-for-four reverse stock split, how many shares are outstanding now? (Do not round intermediate calculations.) New shares outstanding b-2. What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) New par value per share

Solution

ANSWER

(a-1)

= ($ 38000 / $ 0.5) * 2

= 76000 shares * 2

= 152000 Shares

(a-2)

New Par Value = Old Par Value / No of Shares 1 share is splitted into

= $ 0.5 / 2

= $ 0.250

(b-1)

= 76000 shares / 4

= 19000 Shares

(b-2)

New Par Value = Existing Par Value * Reverse Split Ratio

= $ 0.5 * 4

= $ 2.00

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