On September 1, a corporation had 50,000 $5 par value ordinary shares, and $1,000,000 of retained earnings. On that date, when the market price of the share is $15 per share, the corporation issues a 2-for-1 share split. The general journal entry to record this transaction is:

Question

Quizplus · Accepted Answer

A stock split does not affect the balance sheet accounts directly. It increases the number of shares and decreases the par value per share but does not change the total par value of shares outstanding or retained earnings. Therefore, no journal entry is required.

On September 1, a Corporation Had 50,000 $5 Par Value