Following is the shareholders’ equity section of Critter Contracting Inc. shown before and after a share split on April 15, 2017.
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Before split |
After split |
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Shareholders’ Equity |
Shareholders’ Equity |
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Common shares |
Common shares |
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Authorized — 5,000 shares Issued and outstanding— 1,000 shares |
$100,000 |
Authorized— ? shares Issued and outstanding — ? shares |
$ ? |
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On April 15, the board of directors authorized a 5 for 1 share split.
Required:
- Complete the shareholders’ equity section of the balance sheet after the split.
- Record a memorandum indicating the new number of shares.
- If the market value per share was $40 before the split, what would be the approximate market value after the split? Why?
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