Question

On September 1, Ziegler Corporation had 54,000 shares of $5 per value common stock, and $162,000 of retained earmings, On that date, when the market price of the stock is $15 per share, the corparation issues a 2 .for-1 stock split. The generel journal entry to record this transaction is : Multiple Choice:

• Debit Retained Earnings $270000 , credit Split Paysale $270,000 • Debit Retained Earnings $270,000 ; credit Common Stock $270,000 • No entry is made for this transaction. • Debit Retained Earnings $810,000, credit Common $810,000 • Debit Retained Earnings $810,000 ; credit Common Stock Split Distributable $810,000.

Answer 1

Direct Answer:The journal entry to record the 2-for-1 stock split of Ziegler Corporation is Debit Retained Earnings $270,000; credit Common Stock Split Distributable $270,000.Explanation:Ziegler Corporation had 54,000 shares of $5 per value common stock and $162,000 of retained earnings on September 1, when the market price of the stock was $15 per share.The 2-for-1 stock split is the halving of the number of shares and doubling the number of outstanding shares. After the split, the company has 108,000 common stock shares and retained earnings of $162,000. As a result, the common stock split distributable should be recorded by the company.The journal entry to record the 2-for-1 stock split of Ziegler Corporation is:Debit Retained Earnings $270,000Credit Common Stock Split Distributable $270,000Therefore, the correct answer is Debit Retained Earnings $270,000; credit Common Stock Split Distributable $270,000.