A Company Whose Stock Is Selling for $45 Has the Following

question 34

Essay

A company whose stock is selling for $45 has the following balance sheet: $\begin{array}{ll}\text { Assets }\quad\$32,000\quad\quad\quad\text { Liabilities }\quad\$10,000\\\text { Common stock }&6,000\\\text { (\$6 par; 1,000 }\text { shares issued) }\\\text { Additional paid-in capital }&2,000\\\text { Retained eamings }&14,000\end{array}$
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a. Construct a new balance sheet showing a 3 for 1 stock split. What is the new price for the stock?
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b. What would be the balance sheet if the firm paid a 10 percent stock dividend (instead of the stock split)?
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Definitions:

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