Question

Reporting stockholders’ equity after a stock split

Wood Golf Club Corp. had the following stockholders’ equity at December 31, 2017:

Common Stock—\(1 Par Value; 650 sharesauthorized, 270 shares issued and outstanding

Paid-In Capital:

2,600

\) 270

810

Retained Earnings

Total Stockholders’ Equity $ 3,410

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 540

Total Paid-In Capital

On June 30, 2018, Wood Golf Club split its common stock 2-for-1. Prepare the stockholders’ equity section of the balance sheet immediately after the split. Assume the balance in retained earnings is unchanged from December 31, 2017.

Short answer

Total shareholders’ equity of the company is $3,410

Step-by-step solution

Basic Introduction

$\begin{array}{rcl}\mathbf{NumberofSharesPost}\mathbf{-}\mathbf{Split}& \mathbf{=}& \mathbf{NumberofShares}\mathbf{\times }\mathbf{StockSplit}\\ & \mathbf{=}& \mathbf{270}\mathbf{\times }\mathbf{2}\\ & \mathbf{=}& \mathbf{540}\\ & & \end{array}$

$\begin{array}{rcl}\mathbf{StockPricePost}\mathbf{-}\mathbf{Split}& \mathbf{=}& \frac{\mathbf{StockPriceBeforeStockSplit}}{\mathbf{StockSplit}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{1}}{\mathbf{2}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{0}\mathbf{.}\mathbf{5}\\ & & \end{array}$

Balance sheet (Partial)

Balance sheet (Partial) Dec 31, 2017
Shareholders’ Equity
Common Stock—$0.5 Par Value; 650 shares authorized, 540shares issued andoutstanding	$270
Paid-In Capital in Excess of Par—Common	$540
	$810
Retained Earnings	$2,600
Total Stockholders’ Equity	$3,410