Question

On february​ 1, a corporation has 30 comma 00030,000 shares of $ 1$1 par value common stock issued and outstanding. the corporation also has additional paidminus−in capital of $ 100 comma 000$100,000 and retained earnings of $ 100 comma 000$100,000. on february​ 1, the corporation declared a 2minus−forminus−1 stock split. after the​ split, what is the total par value of the common stock and the total​ stockholders' equity,​ respectively?

Answer 1

The Stock split changes only the number of shares and the par value per share, it does not make any change in the total par value of the common stock and the total amount of the stockholders' equity.

Hence, the total par value of the common stock shall remain same $30,000

and the total amount of the stockholders' equity shall be calculated as follows:

Stockholders' equity= Par value of Common stock + Additional Paid in Capital + Retained earnings

= 30,000+100,000+100,000

= $ 230,000

Hence, the total par value of the common stock shall be $30,000 and the total​ stockholders' equity shall be $ 230,000