Andrusco Corp. has the following B. S.: Assume Andrusco\'s common stock is quote
ID: 2718357 • Letter: A
Question
Andrusco Corp. has the following B. S.: Assume Andrusco's common stock is quoted on the OTCBB at 159 7/19. The VP of Finance recommends a 4-for-l split to increase trading activity. Show the effects of this action on the BS, and on a shareholder of the company. Assume Andrusco's stock is trading in the Pink Sheets at 1 1/11. The VP of Finance recommends a l-for-10 split. Show the effects of this action on the BS and a shareholder. Andrusco has just announced a 12% stock dividend with the stock priced at 63.79. Show the effects of this action on the company's BS and a shareholder.Explanation / Answer
Balance Sheet Share holder Ans 1 Only par value and the no of shares change , no change in value of equity . Share holder get 4 shares for evey one share he holds but at the reduced face value. Ans 2 Only par value and the no of shares change , no change in value of equity . Share holder get 1 share for evey 10 shares he hold but at the increased face value. Ans 3 Retained earnings will get converted to common stock and surplus by 2400000, (20000000*12%) Share holder would get dividend in the form of common stock