Reference no: EM133012208

Question - The shareholders' equity section of the statement of financial position of Del Rosso Winery Inc. at December 31, 2020, is given below:

Shareholders' equity: Preferred shares, $7 cumulative, unlimited authorized, 191,000 shares issued and outstanding  $1,910,000 Common shares, 200,000 authorized, 82,000 shares issued and outstanding 1,640,000 Retained earnings 2,687,000 Total shareholders' equity $6,237,000

On December 31, 2020, the board of directors proposed a five-for-four common stock split. The proposal was approved and new shares were distributed among shareholders. The market price of the shares on December 31, 2020, was $26 per share.

Required -

1. Determine the number of shares that were distributed among the shareholders as a result of the five-for-four stock split.

2. What accounting entry will be made for this split?

3. What would be the expected market price for the shares after giving rise to the five-for-four stock split?

4. Show the shareholders' equity section of the company immediately after the five-for-four stock split.