Question

On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 60 million, $2.00 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $20 on June 13.Prepare a journal entry that summarizes the declaration and distribution of the stock split if it is to be effected in the form of a 100% stock dividend. What is the par per share after the split

Answer 1

Answer:

No journal is needed

Par value  is now $1

Explanation:

There is journal entry for stock split no new funds were received from stockholders and the fact that the equity stockholders capital remain the same after the stock split.

It is a mere book redenomination where the number of outstanding shares in issue is increased while the par value is reduced  proportionally.

In essence a stock split of 2 for 1 means one share is added to existing one and the two shares are now priced at the value of one previously

The par value after stock split=1/2*$2=$1