Question

Exercise 15-13 The common stock of Grouper Inc. is currently seling a $114 per share. The directors wish to reduce the share price and increase share volume prior to a new Issue. The per share par value is $10; book value is $63 per share. 8.70 million shares are issued and outstanding. Credit account eitles are automatically Indented when amount is entered. Do not Prepare the necessary journal entries assuming the following. (Enter amounts in dollars indent (a) The board votes a 2-for-1 stock split. (b) The board votes a 100% stock dividend. manually, If no entry is required, select "No Entry" for the account tities and enter o for the amounts.) Debit Credit No. Account Titles and Explanation (To record the declaration) (To record the distribution) Ouestion Attemots: O of 3 used SAVE FOR LATER Version 4.24.12.1

Answer 1

Ans:

a) The only journal entry needed for a stock split is a memo entry to note the number of shares issued has changed and the par value per share has changed.

However a typical journal entry with debit and credit is not needed since the total dollar value of par value and the other components of the paid in capital and shareholders equity doesn’t change .

The memorandum Entry as follows:

A 2 for 1 split increases the number of shares from 8.70 million to 17.40 million numbers and reduced the par value from $10 to $ 5.The new shares of 17.40 million numbers distributed.

b).. At the time of declaration :The Journal Entry is

No	Accounts titles and Explanation	Debit	Credit
	Retained Earnings	$87000000
	Common Stock Dividend Distributable		$87000,000
	($10*8.70 million shares)
	(To record the Stock Dividend Distribution)

At the time of Distribution :

	Common Stock Dividend Distributable	$87000000
	Common Stock		$87000,000
	(To record the stock Dividend Distribution)