Question: Jordan Inc. had 2 0 , 0 0 0 common shares outstanding, with a book value of $ 4 0 , 0 0 0 ,

Jordan Inc. had 20,000 common shares outstanding, with a book value of $40,000, when it decided to split its common shares 2-for-1. The shares were trading for $60 per share.
How will total shareholders equity change as a result of this stock split?
ANSWER
Total shareholders equity will decrease by the par value of the new common shares
Total shareholders equity is unchanged by a stock split
Total shareholders equity will decrease by the market value of the new common shares, $600,000
Total shareholders equity will increase by the par value of the new common shares
Total shareholders equity will increase by the market value of the new common shares, $600,000

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