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Homework answers / question archive / owners' equity accounts for Blueswell Industries are shown here: Common Stock ($1 par value Po) Capital surplus Retained Earnings Total owner's equity $9000 174,000 568,500 751
owners' equity accounts for Blueswell Industries are shown here: Common Stock ($1 par value Po) Capital surplus Retained Earnings Total owner's equity $9000 174,000 568,500 751.000 The current number of shares outstanding (NO) is 9000. If Blueswell Industries declares a 1-for-5 (n - for - m) reverse stock split, as a result what will be the number of new shares (Nil outstanding at a what Par value (P1) per share. New shares (N1) = No x n/m=- shares New par value (P1) = Po x m/n=S per share
Solution:-
1 for 10 reverse split, shareholders receive one share of the company's new stock for every 10 shares that they owned.
In other words, a shareholder who held 1,000 shares would end up with 100 shares after the reverse stock split was complete.
In the given Case 1-for-5 reverse stock split means shareholders receive one share of the company's new stock for every 5 shares that they owned.
Solution 1):- Shares in No’s:-
Before Reverse Stock Split (shares in No’s) = 9000 no’s
After Reverse Stock Split (shares in No’s) = 1800 no’s
Solution 2):- Share par Value:-
Before Reverse Stock Split (Value per Share) = $ 1 ($9,000/9000 no’s)
After Reverse Stock Split (Value per Share) = $ 5 ($9,000/1800 no’s)
