Question

Robinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share. The balance sheet shows $15,000 in the common stock account, $315,000 in the capital in excess of par account, and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split.

What will the capital in excess of par account value be after the split?

A. $126,000

B. $210,000

C. $283,500

D. $315,000

E. $472,500

Answer 1

The correct answer is option (D).

Step-by-step explanation:

According to the scenario, the given data are as follows:

Common stock = $15,000

Capital in excess of par account = $315,000

Retained earning = $189,000

So, we can calculate the capital in excess of par account after split are as follows:

As Split in stocks does not change value of capital in excess of par account.

Hence, The value of capital in excess of par account remains same.

So, Capital in excess of par account = $315,000