No formal journal entry is required to record a stock split.

Question

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No formal journal entry is required to record a stock split because it does not impact the total par value of the shares or the company's equity structure. The split simply increases the number of shares outstanding and decreases the par value per share, if applicable, without changing the total value of all shares outstanding or the shareholders' equity.
In accounting terms, a stock split is considered a memo entry rather than a transaction that affects the balance sheet accounts. It is recorded only in the company's internal records and disclosed in the notes to the financial statements for informational purposes. The memo entry would typically include the date of the split, the split ratio, and the new number of shares outstanding after the split.
The primary reason for a stock split is to make the stock more affordable and attractive to a broader range of investors by reducing the market price per share. Although the intrinsic value of the company does not change, the lower price per share may improve the stock's liquidity and marketability.

No Formal Journal Entry Is Required to Record a Stock