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

question 57

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,$368,000 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)$336,000
• B)$368,000
• C)$426,000
• D)$548,000
• E)$606,000

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Definitions:

Firm's Demand

The quantity of a product or service that a firm is willing and able to buy at various prices over a given period of time.

Substitution Effect

The change in consumption patterns due to a change in relative prices, causing consumers to substitute away from more expensive items towards cheaper ones.

Employment

Refers to the condition of having paid work or the relationship between an employer and an employee where the employee provides labor in exchange for compensation.

Capital

Financial assets or the financial value of assets, such as cash and goods used to generate income or wealth.