Twin Towns, Inc., was authorized to issue 200,000 shares of common stock and originally issued 100,000 shares of $10 par value stock at $18 per share. Subsequently, 25,000 shares were repur-chased at $20, of which 10,000 were subsequently resold at $23. Assume the company’s retained earnings balance is $120,000. a. Prepare the stockholders’ equity section of Twin Towns’s balance sheet, including all appro-priate disclosures. b. Briefly explain how the declaration and distribution of a 2-for-1 stock split subsequent to theabove transactions would affect the stockholders’ equity section you have prepared.
Twin Towns, Inc., was authorized to issue 200,000 shares of common stock and originally issued 100,000 shares of $10 par value stock at $18 per share. Subsequently, 25,000 shares were repur-chased at $20, of which 10,000 were subsequently resold at $23. Assume the company’s retained earnings balance is $120,000. a. Prepare the stockholders’ equity section of Twin Towns’s balance sheet, including all appro-priate disclosures. b. Briefly explain how the declaration and distribution of a 2-for-1 stock split subsequent to theabove transactions would affect the stockholders’ equity section you have prepared.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Twin Towns, Inc., was authorized to issue 200,000 shares of common stock and originally issued
100,000 shares of $10 par value stock at $18 per share. Subsequently, 25,000 shares were repur-
chased at $20, of which 10,000 were subsequently resold at $23.
Assume the company’s
a. Prepare the
priate disclosures.
b. Briefly explain how the declaration and distribution of a 2-for-1 stock split subsequent to the
above transactions would affect the stockholders’ equity section you have prepared.
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