Subject: reverse share split

On July 1, 2016, Aguila Corp has 200,000 shares of $10 par ordinary shares outstanding and the marke price of the stock was $12 per share. On the same date, Aguila declared a 1-for-2 reverse share split. the par value of the share was increased from $10 to $20 and one new $20 par share was issued for each two $10 par shares outstanding. Immediately before the 1-for-2 reverse share split, Aguila's share premium was $450,000. What should be the balance in Aguila's share premium account immediately after the reverse share split is effected?

(Show computation or explanation)

a. - 0 - b. $450,000 c. $650,000 d. $850,000