Question

On september 1, ziegler corporation had 50,000 shares of $5 par value common stock, and $1,500,000 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

A 2-for-1 stock split by Ziegler Corporation will double the number of shares and adjust the par value per share but does not require a general journal entry as it does not impact the overall equity. The change is reflected in the equity section of the balance sheet.

Step-by-step explanation:

The student has asked about the accounting treatment for a 2-for-1 stock split by Ziegler Corporation, which has shares of $5 par value common stock. On September 1, before the stock split, there were 50,000 shares outstanding with a market price of $15 per share. After a 2-for-1 stock split, the number of shares will double to 100,000, and the par value per share will be adjusted to maintain the overall par capital unchanged. The market price typically adjusts in response to a stock split, but this does not affect the accounting records directly.

There is no need for a general journal entry to record a stock split because it does not impact the overall equity of the firm; it only changes the number of shares outstanding and the par value per share. However, the corporation may note the change in the number of shares and par value per share in the equity section of its balance sheet.

Answer 2

this transaction is what?