Question

On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 60 million, $1.00 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $25 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:

1. Dr Stock dividends $60 million

Cr Common stock $60 million

2. $1

Explanation:

Preparation of the journal entry that summarizes the declaration and distribution of the stock split

Journal Entries for Siewert Inc

(In millions)

1. Based on the information given we were told that On June 13, the board of directors of the company declared a 2-for-1 stock split on its 60 million which means that the Journal entry will be recorded as :

Dr Stock dividends $60 million

Cr Common stock $60 million

(To record issue of stock dividend)

2. The Par value per share after split =$1 reason been that split are often in form of stock dividend.