On September 1, Ziegler Corporation had 71,000 shares of $5 par value common sto

Question

On September 1, Ziegler Corporation had 71,000 shares of $5 par value common stock, and $213,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

A.) Debit Retained Earnings $355,000; credit Common Stock $355,000.

B.) No entry is made for this transaction.

C.) Debit Retained Earnings $1,065,000; credit Common Stock $1,065,000.

D.) Debit Retained Earnings $1,065,000; credit Common Stock Split Distributable $1,065,000.

E.) Debit Retained Earnings $355,000; credit Stock Split Payable $355,000.

On September 1, Ziegler Corporation had 71,000 shares of $5 par value common stock, and $213,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

Explanation / Answer

Stock split does not have any effect on the financial values of balance sheet. It just changes the face value of values and number of shares. All values will be same.

Hence, correct option is (B).

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