Mario's Has 18,000 Shares of Stock Outstanding with a Par

question 91

Multiple Choice

Mario's has 18,000 shares of stock outstanding with a par value of $1 per share and a market price of $4 a share. The balance sheet shows $18,000 in the common stock account, $336,000 in the paid in surplus account, and $64,000 in the retained earnings account. The firm just announced a 5-for-1 stock split. What will the paid in surplus account value be after the split?

• A)$66,000
• B)$336,000
• C)$426,000
• D)$548,000
• E)$606,000

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Definitions:

Cumulative Voting

A system of voting for corporate directors that is designed to benefit minority shareholders by allowing shareholders to multiply their voting shares by the number of directors to be elected.

Cumulative Voting

A voting system used in corporate elections that allows shareholders to concentrate their votes on a single candidate rather than distributing them among multiple candidates.

Proxy Voting

The process by which shareholders vote on company matters through a representative rather than in person.

Shareholders

Individuals or entities that own shares in a company, making them partial owners of the company.