Answer :
(a). New shares = 10%*20000 = 2000
New Equity accounts
Ordinary shares = 22000
Capital surplus (Increase of 2000*19) = 238000
Retained earnings (decrease of 2000*20)= 386500
Total Equity = 646500
(b). Shares outstanding = 20000*2 = 40000
new par value =1/2 = $0.5
The Equity accounts remain the same.
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