The stockholders’ equity account of Paper Weight Company is as follows:

a. How will the stockholders’ equity account change if Paper Weight Company declares a 2-for-1 stock split?
b. How will the stockholders’ equity account change if Paper Weight Company declares a 1-for-2 reverse stock split?
c. How will the stockholders’ equity account change if Paper Weight Company declares a 3-for-1 stock split?
d. How will the stockholders’ equity account change if Paper Weight Company declares a 1-for-4 reverse stock split?
e. Considering your answers in parts a to d, what do you notice?

Transcribed Image Text:

Preferred stock Common stock (200,000 shares at $5 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 300,000 1,000,000 500,000 820,000 $2,620,000