Question

A person owned 300 shares of MNO common stock, which cost $23,400. MNO then had a 3-for-1 stock split. After the split, the person sold 100 shares for $5,600. How much gain (or loss) resulted from the sale?

Answer 1

A 3-for-1 stock split means that the number of shares is multiplied by 3,
and becomes 900 shares.
Cost of one share before split:
`(23,400)/(300)=\$78`
Cost of one share after split:
`(23,400)/(900)=\$26`
Cost of 100 shares before split:
`78*100=7800`
Cost of 100 shares after split:
`26*100=2600`
The above sale result in loss of:
`7800-2600=\$5200`