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A company has 360,000 shares authorized, 200,000 shares issued, and 100,000 shares outstanding. The par value of its stock is $1 per share. The company does a 2-for-1 stock split. What is the balance in its Common Stock account after the split?


The balance in Common Stock = shares issued x par value. Pre-split, this will be: Common Stock = 200,000 x $1 = $200,000. After the split, the number of shares issued will double to 400,000 and the par value will drop by 1/2 to $0.50 per share. Thus, the balance is Common Stock will be $0.50 x 400,000 = $200,000, which is the same pre-split amount (as must be the case).

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