On April 1, Blue Devil Inc. has 300,000 shares of $20 par value common stock that are issued and outstanding. The general ledger shows the following account balances relating to the common stock:   Common stock                                              $6,000,000 Paid-in capital in excess of par value              1,350,000   On April 20, Blue Devil splits its stock 5-for-2 and reduces the par value to $8 per share.   a. How many shares of common stock are issued and outstanding immediately following the stock split? b. What is the balance in the Common Stock account immediately following the stock split?

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.