On January 1, 2013, Parquet Sales Issued 40,000 Shares of Common

question 56

Multiple Choice

On January 1, 2013, Parquet Sales issued 40,000 shares of common stock at a price of $22 per share. The stock has a par value of $1.00 per share. In mid-2014, due to dramatic increases in profits, the stock reached a market value of $90 per share. The board of directors approved a 2-for-1 stock split. After the stock split, what will the balance sheet show as the par value of common stock?

• A) $2.00
• B) $1.50
• C) $1.00
• D) $0.50

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Definitions:

Purchase Order

A document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Receiving Report

A document used by a company to record the receipt of purchased goods, verifying that the goods have been delivered as per the purchase order.

Invoice

A document issued by a seller to a buyer, detailing products or services provided, amounts owed, and payment terms.

Merchandise Inventory

The value of a company's goods that are ready for sale to customers during an accounting period.