Question

Pettygrove Company had 1,800,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $9,000,000, and Retained Earnings is $2,700,000. The company issues a 2-for-1 stock split. The market price of the stock is $12. What is the balance in the Common Stock account after this issuance

Answer 1

Answer:

$18,000,000

Explanation:

The computation of the balance in the common stock after the issuance is shown below

Before the stock split:

Common stock account balance = Shares issued × Par value per share

= 1,800,000  × $10

= $18,000,000

After the stock split:

Common stock account balance = $18,000,000

As Stock Split up does not change the balance of any account so it would remain unchanged