Answer: Balance before Split - $67,500
After Split No. of shares - 10.8 billion
After Split Par Value - $0.00000625
After Split Balance - $67,500
Explanation:
Microsoft had 5.4b shares outstanding and par value was $0.0000125.
Before the split the balance in the Common Stock account was:
We will multiply the no. Of shares outstanding by the par value.
= 5.4 billion * $0.0000125
= $67,500
After the split shares outstanding are (in billions):
The split was a 2 for 1 split meaning the shares doubled. That would mean,
= 5.4b * 2
= 10.8 billion shares outstanding
After the split par value is:
It was a 2 for 1 split. That would mean that prices had to have halved. Calculating therefore,
= $0.0000125/2
= $0.00000625
After the split the balance in Common Stock is
= 10.8 billion shares * $0.00000625
= $67,500
Balance remained the same showing that total equity remains the same. Only no of shares and price changes.
