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