Pryor Corporation issued a 2-for-1 common stock split. The shares had been originally issued at $ 10 per share. At what amount should retained earnings be capitalized for the additional shares issued?
A) There should be no capitalization of retained earnings.
B) $ 10 per share
C) market value on the declaration date
D) market value on the payment date

Question

Quizplus · Accepted Answer

Retained earnings should not be capitalized for a stock split as it does not involve any issuance of new shares or inflow of capital. It only increases the number of outstanding shares, which lowers the price per share but does not affect the overall value of the company or its equity.

Pryor Corporation Issued a 2-For-1 Common Stock Split