LO5 E1319 Washington Corporation has 1000000 orporation has

LO5 E13.19 Washington Corporation has 1,000,000 orporation has 1,000,000 shares of common stock issued and outstanding with a S1 par e-for-four reverse stock split, how many shares will be issued and out- value. If Washington declares a on standing and what will the par value be after the split?

Solution

Number of shares to be issued under the reverse stock split = $ 1,000,000 / 4 = 250,000 shares.

Par value of the shares after the stock split = Par value per share x Exchange Ratio = $ 1 par value x 4 = $ 4.00 per share.