Reference no: EM132826457

Problem 1: The balance of the $0.50 par value Common Stock account for Murdock Company was $60,000 before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the stock split. What likely occurred as a result of the stock split?

a. The market price of the stock was not likely affected.
b. The market price of the stock likely dropped to approximately $10 per share.
c. he balance in the Common Stock account likely declined to $20,000.
d. The balance in the Retained Earnings account likely decreased.

Problem 2: Fairchild Company acquired a building valued at $210,000 for property tax purposes in exchange for 6,000 shares of its $10 par common stock. The stock is widely traded and selling for $31 per share. At what amount should the building be recorded by Fairchild Company?

a. $60,000
b. $210,000
c. $150,000
d. $186,000