Question

A person owned 300 shares of MNO common stock, which cost $23,400. MNO then had a 3-for-1 stock split. After the split, the person sold 100 shares for $5,600. How much gain (or loss) resulted from the sale?

Answer 1

A 3-for-1 stock split means that the number of shares is multiplied by 3, 
and becomes 900 shares. 
Cost of one share before split: $\frac{23,400}{300}=\ 78$
Cost of one share after split: $\frac{23,400}{900}=\ 26$
Cost of 100 shares before split:$78\times100=7800$
Cost of 100 shares after split:$26\times100=2600$
The above sale result in loss of: $7800-2600=\ 5200$