On June 13 the board of directors of Siewert Inc declared a 2-for-1 stock split

Question

On June 13 the board of directors of Siewert Inc declared a 2-for-1 stock split on its 100 million, $1 par, common shares, to be distributed on July 1 The market price of Siewert common stock was $21 on June 13. Prepare the journal entry to record the stock split if it is to be effected in the form of a 100% stock dividend (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Explanation / Answer

As the stock dividend is more than 25%, it will effected at par value of $1 per issue. So the entries will be ; Date Account Title Dr $ Cr $ Jun 13. Retained Earning       100,000,000 Stock Dividend Payable      100,000,000 ( declaration of 100% stock dividend @$1 par) Jul 1. Stock Dividend Payable     100,000,000 Common Stock at Par ($1)      100,000,000 ( issue of stock dividend declared)

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