For the company in Problem 4, show how the equity accounts will change if:
a. The company declares a two-for-one stock split. How many shares are outstanding now? What is the new par value per share?
b. The company declares a one-for-five reverse stock split. How many shares are outstanding now? What is the new par value per share?

Problem 4

Common stock ($1 par value) .......$  45,000
Capital surplus ..................................157,000
Retained earnings         ......................603,000
Total owners’ equity .......................$805,000