Question

On September 1, Ziegler Corporation had 58,000 shares of $5 par value common stock, and $174,000 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

No entry is made for this transaction.

Step-by-step explanation:

In order to be able to solve this question correctly, one needs to understand the basics of stock split. The term "stock split" in finance can simply be defined as the introduction and sharing of new stocks to the existing shareholders or simply the Increase in the amount of stock in a company. It is a good indicator for shareholders to buy.

The Important thing to take note under stock split is that the numbers of par value does not change as well as the number of shares. Therefore, there is no need for Common stock split account and Debit Retained Earnings.

Answer 2

hi your question lacks the required options here are the options

Debit Retained Earnings $290,000; credit Stock Split Payable $290,000.

Debit Retained Earnings $290,000; credit Common Stock $290,000.

Debit Retained Earnings $870,000; credit Common Stock Split Distributable $870,000.

Debit Retained Earnings $870,000; credit Common Stock $870,000.

Answer : No entry is made for this transaction.

Step-by-step explanation:

The general journal entry to record this transaction is : no entry is made for this transaction. this is because in a stock split only the number of shares and par value shares would change and this does not affect the total amount of par value shares and other paid in capital. therefore the general journal entry to this record does not need any entry , rather a memo may be passed to the effect of change in number of shares