Aiello Company began the year with $56,000 in retained earnings, and 21,000 shares of $0.25 par value common stock originally issued at $5 per share. During the year, the board of directors declared $6,000 of cash dividends on June 30. On July 1, Aiello Company declared a 1-for-2 reverse stock split. The market price of the Aiello Company stock was $18.00 just before the split.
Which of the following is one effect on the day the stock split occurs?
A. Retained earnings increases by $5,250.
B. Common stock increases by $5,250.
C. Total shareholders' equity decreases by $10,500.
D. The market price of the stock increases to $36.00 per share.
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Aiello Company began the year with $56,000 in retained earnings, and 21,000 shares of $0.25 par valu...
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