Brief Exercise 18-15 Stock split [LO18-8] On June 13, the board of directors of

Question

Brief Exercise 18-15 Stock split [LO18-8]

On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 40 million, $2 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $18 on June 13.

Prepare the journal entry to record the stock split if it is to be effected in the form of a 100% stock dividend. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

What is the par per share after the split?

On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 40 million, $2 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $18 on June 13.

Explanation / Answer

Reserves & surplus A/c ...........Dr 160 million

To, Equity Share capital 160 million

(Being existing 40 million share holders are provided 2 equity shares for each share they held. Then value of new equity shares issued is 40×2 million shares at $2 each.)

Total number of equity share holders after the scheme will be

40 million + 80 million = 120 million

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