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On July 1, Black Corporation had 200,000 shares of $10 par common stock outstanding. The market price of the stock was $12 per share. On the
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On July 1, Black Corporation had 200,000 shares of $10 par common stock outstanding. The market price of the stock was $12 per share. On the same date, Black declared a 1 for 2 reverse stock split. The par value of the stock was increased from $10 to $20, and one new $20 par share was issued for each two $10 par shares outstanding. Immediately before the reverse stock split, Black’s Paid-in capital–excess of par account equaled $4,000,000. What should be the balance in Black’s Paid-in capital–excess of par account immediately after the reverse stock split?
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2021-09-05T13:25:57+00:00
2021-09-05T13:25:57+00:00 1 Answers
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Answer:
$4000000
Step-by-step explanation:
Given data :
200000 shares at $10 par common stock outstanding
market price of stock = $12 per share
increased par value of stock = $10 ( $20)
Black’s paid-in capital–excess of par account = $4000000.
The balance in Black’s paid-in capital–excess of par account immediately after the reverse stock spit will be $4000000 because the increased par value of stock from $10 to $20 will be reversed back immediately after the reverse stock hence the paid-in capital–excess before stock split = paid-in capital –excess immediately after reverse stock split