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On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on...

On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 150 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $28 on June 13. Prepare the journal entry to record the stock split if it is not to be effected in the form of a stock dividend. What is the par per share after the split?

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In This problem we come across the two tasks one is Journal Entry second one is Par value of Common Stock After split

  1. For Stock Split There is no Journal Entry because It doesn’t change in any value, It is just split the shares and it doesn’t have any conversion of one form to another.
  2. The par Value of common stock is $1 and Going to split into 2 then the Value of each common stock will be $0.50 and Total common stock shares before spilt is 150 Millions

Now it is double because of 2shares for 1 stock split method then 300 Millions common stock after spilt

Par Value of Share=$1/2=$0.5

Total Number common Stock After Spilt = Common stock Before spilt *2

=150 Millions*2=300 Millions

Therefore the Number of Outstanding shares after spilt is $300 Millions shares having the par Value of $0.50.

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