Charles Corporation currently has 250,000 shares of $1 par value common stock au
ID: 2489302 • Letter: C
Question
Charles Corporation currently has 250,000 shares of $1 par value common stock authorized with 100,000 shares outstanding. The board of directors declared a 2-for-1 split on May 15, 2014, when the market value of the common stock was $2.50 per share. The retained earnings balance on May 15 was $350,000. Additional paid-in capital on this date was $10,000. Prepare the stockholders' equity section of the company's balance sheet before the stock split. Prepare the stockholders' equity section of the company's balance sheet after the stock split.Explanation / Answer
Before Split
May 15 ,2014
Contributed capital
Common stock $1 par value
100,000
Additional paid in capital
10,000
Total contributed capital
110,000
Retained earnings
350,000
Total stockholder’s Equity
460,000
After Stock Split
Contributed capital
Common Stock @$.50 par value
100,000
Additional paid in capital
10,000
Total contributed capital
110,000
Retained Earnings
350,000
Total stockholder’s Equity
460,000
Contributed capital
Common stock $1 par value
100,000
Additional paid in capital
10,000
Total contributed capital
110,000
Retained earnings
350,000
Total stockholder’s Equity
460,000