What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share at the time the stock split is declared

a. $45,000

Explanation:

The retained earnings of the Company X at the beginning of the year shall be determined using the following mentioned formula:

Retained Earnings at the end of year=Retained Earnings at the start of the year+net income for the year-dividend paid by company X

In the given question:

Retained Earnings at the end of year=$60,000

Retained Earnings at the start of the year=?

Net income for the year=$25,000

Dividends paid by Company X=$10,000

$60,000=Retained Earnings at the start of the year+$25,000-$10,000

Retained Earnings at the start of the year=$60,000-$25,000+$10,000

                                                                    =$45,000

So based on the above calculation, the answer is a. $45,000