On September 1, Ziegler Corporation had 68,000 shares of $5 par value common sto

Question

On September 1, Ziegler Corporation had 68,000 shares of $5 par value common stock, and $204,000 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:

a)Debit Retained Earnings $1,020,000; credit Common Stock Split Distributable $1,020,000.
b) Debit Retained Earnings $1,020,000; credit Common Stock $1,020,000.
c)Debit Retained Earnings $340,000; credit Common Stock $340,000.
d) Debit Retained Earnings $340,000; credit Stock Split Payable $340,000.
e) No entry is made for this transaction.

Explanation / Answer

e) No entry is made for this transaction.

In stock split only shares are changed, there is no increase in value of shares.

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