Michael's Boating Supplies Has 150,000 Shares of Stock Outstanding with a Par

question 86

Multiple Choice

Michael's Boating Supplies has 150,000 shares of stock outstanding with a par value of $1 per share and a market value of $10 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. How many shares of stock will be outstanding after the split?

• A) 30,000 shares
• B) 250,000 shares
• C) 312,500 shares
• D) 500,000 shares
• E) 625,000 shares

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Definitions:

Revenue Accounts

Accounts that track the income earned from a company's primary operations and other activities.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Accounting Period

The span of time at the end of which a company calculates its financial performance, typically a quarter or year.

Journalized

The act of recording a transaction in an accounting journal, documenting the financial activities of a business.