Question

Robinson's has 42,000 shares of stock outstanding with a par value of $1 per share and a market price of $44 a share. the balance sheet shows $42,000 in the common stock account, $495,000 in the paid-in surplus account, and $490,000 in the retained earnings account. the firm just announced a 3-for-2 stock split. how many shares of stock will be outstanding after the split?

a. 28,000 shares
b. 63,000 shares
c. 35,000 shares
d. 84,000 shares
e. 62,500 shares

Answer 1

The number of shares of stock that will be outstanding after a 3-for-2 stock split is 63,000 shares. Therefore, the correct option is C.

Step-by-step explanation:

To determine the number of shares of stock that will be outstanding after a stock split, we need to consider the ratio of the split. In this case, the split is 3-for-2, which means for every 2 existing shares, 3 new shares will be created. Given that there are currently 42,000 shares outstanding, we can calculate the new number of shares as follows:

New number of shares = (42,000 / 2) * 3 = 63,000 shares

Therefore, the correct answer is option b. 63,000 shares.