Question

On September 1, Ziegler Corporation had 57,000 shares of $5 par value common stock, and $171,000 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:

Answer 1

Answer: No entry required

Explanation:

A stock split does not change the overall value of equity so will not have any effect on the Equity accounts of the company.

Equity is also recorded by its total value in the financial statements and not the number of shares the company has. There will therefore be no entry to record that the number of shares has increased and because the total value does not change, neither does equity.