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Forward Stock Split On March 1 of the current year, Center Corporation has 500,000 shares of...

Forward Stock Split

On March 1 of the current year, Center Corporation has 500,000 shares of $10 par value common stock that are issued and outstanding. The general ledger shows the following account balances relating to the common stock:

Common stock $5,000,000
Paid-in capital in excess of par value 3,500,000

On March 2, Center Corporation splits its stock 2-for-1 and reduces the par value to $5 per share.

a. How many shares of common stock are issued and outstanding immediately following the stock split?



b. What is the balance in the Common Stock account immediately following the stock split?


c. What is the balance in the Paid-in Capital in Excess of Par Value account immediately following the stock split?

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Answer #1

a) Common Stock issued and outstanding after stock split = 500000*2 = 1000000 Shares

b) Balance in Common Stock after stock split = 5000000

c) Paid in capital after stock split = 3500000

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