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On August 10, 2014, Geller, Inc.’s board of directors declared a 3-for-1 stock split of its...

  1. On August 10, 2014, Geller, Inc.’s board of directors declared a 3-for-1 stock split of its $9 par value common stock, of which 400,000 shares were authorized and 125,000 were issued and outstanding. The market value on that date was $60 per share. On the same date, the balance of additional paid-in capital was $3,000,000, and the balance of retained earnings was $3,250,000. Prepare the stockholders’ equity section of the company’s balance sheet after the stock split. What entry, if any, is needed to record the stock split?
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Answer #1

Stockholder's equity

Stockholder's equity
Paid in capital
Common Stock 400000 Share authorized, 375000 Share issued and outstanding, 3 per share 1125000
Additional paid in capital 3000000
Total paid in capital 4125000
Retained earnings 3250000
Total Stockholder's equity 7375000

No entry would be needed For Stock split

Only Stock outstanding will increase to = 125000*3 = 375000 Shares and par value per share decrease to 9/3 = $3 per share

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