Question

On September 1, Ziegler Corporation had 61,000 shares of $5 par value common stock, and $183,000 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 needed for this transaction

Step-by-step explanation:

There wont be any general journal entry to record this transaction because NO entry is needed for this transaction .

Using this formula for the Calculation of Before split and After split

Number of share×Per value=Market Capitalization

Before Split 57,000 shares× $5 per value=$285,000

After split(2-for-1 stock split)

(57,000 shares ×2) 114,000

Per value of $5÷2=2.5

Hence,

114,000×$2.50=$285,000

Based on this calculation No entry is needed for this transaction because the total dollar value of shares issued does not change.