In: Finance
The shareholders’ equity account for Kowloonia Trust is shown here:
Common Stocks (1,000 shares outstanding) $600,000
Retained Earning $790,000
Total $1,390,000
a) If Kowloonia declares a three-for-one stock split, how many shares will be outstanding? Show how the equity accounts will change.
b) If Kowloonia declares a one-for-four reverse stock split, how many shares will be outstanding? Show how the equity accounts will change.