Question

During May 2021, Breakfront Corporation announced a 2-for-1 stock split, bringing the number of shares outstanding from 25,000,000 shares to how many shares, and its $2.00 par value to how much per share?

a. 50,000,000 shares; $2.00 per share
b. 12,500,000 shares; $4.00 per share
c. 50,000,000 shares; $1.00 per share
d. 12,500,000 shares; $2.00 per share

Answer 1

After a 2-for-1 stock split by Breakfront Corporation, the shares outstanding increased to 50,000,000 and the par value per share decreased to $1.00, making the correct answer (c) 50,000,000 shares; $1.00 per share.

Step-by-step explanation:

During May 2021, Breakfront Corporation announced a 2-for-1 stock split, which means for every share that a shareholder owns, they will now have two. Thus, the number of shares outstanding will double from 25,000,000 shares to 50,000,000 shares. Additionally, when a stock split occurs, the par value of the stock is also divided by the split factor. In this case, the $2.00 par value is divided by 2, resulting in a new par value of $1.00 per share. Therefore, the correct answer is c. 50,000,000 shares; $1.00 per share.