EX 13-20 Effect of stock split

Gino’s Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino’s Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock split (4 additional shares for each share issued).

a. What will be the number of shares outstanding after the split?

b. If the common stock had a market price of $200 per share before the stock split, what would be an approximate market price per share after the split?


Answer:
a. 500,000 shares (100,000 × 5)
b. $40 per share ($200/5)

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