a 2-for-1 stock split is declared. in this case which of following statements is true? course hero

by Janie Bergstrom 5 min read

What happens when a stock split 2 for 1?

In a 2-for-1 stock split, the number of outstanding shares is doubled and the price is reduced by half. The total market value (market cap) of the issuer's stock remains the same. If a company splits its stock 3 for 2, how many additional shares will be issued to an investor who owns 200 shares?

How many shares would an investor receive from a 5-4 split?

If ABC Corp. declares a 5-4 stock split, an investor who owns 300 shares would receive how many additional shares? A) 75. B) 100. C) 30. D) 60. A) 75. A 5-4 split represents a 25% increase in shares. For each 4 shares owned, the investor will receive 1 new share. 1/4 = 25% increase. 300 shares × 25% = 75 shares.

Does a forward split increase the number of shares outstanding?

- A forward split increase the number of shares and reduces the price without affecting the total market value of shares outstanding. - An investor will receive more shares, but the value of each share is reduced. - The total market value of the ownership interest is the same before and after the split. TRUE OR FALSE?

How does a 2-1 stock split affect the par value?

After a 2-1 stock split, the number of outstanding shares doubles and the par value per share decreases by half. Retained earnings are not affected. A) 0.48. B) 0.32. C) 0.3. D) 0.4. B) 0.32. Stock splits will change the par value of the stock. To calculate the new value multiply the original par by the inverse of the split: 4/5 × $.40 = $.32.

Which of the following occurs when a 2-for-1 stock split is declared?

The retained earnings of a corporation is​ ________. Which of the following occurs when a​ 2-for-1 stock split is​ declared? The balance in Common Stock remains the same.

What effect would the declaration of a 2-for-1 stock split have on a company's stockholders equity accounts?

For example, in a 2-for-1 stock split, a shareholder receives an additional share for each share held. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split.

Do you record a 2-for-1 stock split?

For example, a 2-for-1 stock split would reduce the par value of each share of stock by 50 percent. No account is debited, but a memo entry should be made on the company's balance sheet indicating the change in the company's per share par value.

How does a 2-for-1 stock split affect retained earnings?

If the event is a stock split, there is no change in either Retained Earnings or Common Stock, only a decrease in par value and an increase in the number of issued and outstanding shares.

What effect occurs when a stock split is declared?

A stock split is a corporate action that companies take to increase the number of outstanding shares and decrease the value of each share. In other words, as a company's stock price increases, investors are rewarded with higher returns.

What effect occurs when a stock split is declared quizlet?

A stock split will increase the number of shares outstanding and will increase total stockholders' equity. B : Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity.

Why a company may use a 2 for 1 stock split?

A 2 for 1 stock split lets that less wealthy investor class in on a valuable stock. Retail investors tend to be much more comfortable with a lower price. And they're more likely to buy multiple shares of the company.

When a company declares a 2 for 1 stock split the number of outstanding shares?

What Is a 2 for 1 Stock Split? A 2-for-1 stock split grants you two shares for every one share of a company you own. If you had 100 shares of a company that has decided to split its stock, you'd end up with 200 shares after the split. A 2 for 1 stock split doubles the number of shares you own instantly.

How do you record a 2 for 1 stock split in a journal entry?

The only journal entry needed for a stock split is a memo entry to note that the number of shares has changed and that the par value per share has changed (if the stock has a par value).

How to calculate x y split?

What are the steps to calculating a stock split? 1. Multiply the # of shares by the $ of each share to determine the total value of the stocks. 2. For an x:y split, multiply x by the # of shares and divide by y for the new # of shares.

What happens when you reverse a split?

When a reverse split takes place, the number of outstanding shares is reduced. Since the split has no effect on earnings of the company, dividing those earnings by fewer shares will cause an increase to the earnings per share. The board of directors of DMF, Inc., announces a 5:4 stock split.