Brooks Inc.has 750,000 common shares outstanding with a recorded book value of $15,000,000.On December 1st, when their shares were trading at $30 they declared 2-for-1 stock split.Which of the following journal entries would Brooks Inc.use to record the event? $\begin{array}{lc}
\text { A) Dr. Retained earnings } & 22,500,000 \
\text { Cr. Common shares } & {22,550,000} \
\text { B) Dr. Retained earnings } & 15,000,000 \
\text { Cr. Common shares } &{15,000,000} \
\text { C) Dr. Retained earnings } & 7,500,000 \
\text { Cr. Common shares } & 7,500,000 \
\text { D) No journal entry is required. } &
\end{array}$

Question

Quizplus · Accepted Answer

A stock split does not impact the financial statements in terms of debits and credits. It simply increases the number of shares outstanding and decreases the par value per share, without affecting the total book value of equity. Therefore, no journal entry is required to record a stock split.

Brooks Inc A)Option a B)Option B C)Option C D)Option D

Brooks Inc A)Option a
B)Option B
C)Option C
D)Option D