On September 1, Ziegler Corporation had 68,000 shares of $5 par value common sto
ID: 2516166 • Letter: O
Question
On September 1, Ziegler Corporation had 68,000 shares of $5 par value common stock, and $204,000 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 $1,020,000; credit Common Stock Split Distributable $1,020,000.
b) Debit Retained Earnings $1,020,000; credit Common Stock $1,020,000.
c)Debit Retained Earnings $340,000; credit Common Stock $340,000.
d) Debit Retained Earnings $340,000; credit Stock Split Payable $340,000.
e) No entry is made for this transaction.
Explanation / Answer
e) No entry is made for this transaction.
In stock split only shares are changed, there is no increase in value of shares.