Lecture20_more_stock_splits

Lecture20_more_stock_splits - stock split does not affect...

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STOCK SPLITS A stock split , like a stock dividend, involves the issuance of additional shares of stock to stockholders according to their percentage of ownership . However, a stock split results in a reduction of par or stated value per share. The purpose of a stock split is to increase the marketability of the stock by lowering its market value per share . In a stock split, the number of shares is increased in the same proportion that par or stated value per share is decreased . A stock split does not have any effect on total paid-in capital, retained earnings , and total stockholders’ equity . However, the number of shares outstanding increases .
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STOCK SPLIT EFFECTS IN THE ACCOUNTING RECORDS Assume that Medland Corporation splits its 50,000 shares of common stock on a 2-for-1 basis . Because a
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Unformatted text preview: stock split does not affect the balances in any stockholders equity accounts, it is not necessary to journalize a stock split . STOCK SPLIT EFFECTS STOCK SPLIT EFFECTS IN THE MARKET IN THE MARKET J&J's Closing Stock Price $-$20.00 $40.00 $60.00 $80.00 $100.00 $120.00 Date Price Per Share $ On what date in June, 2001 did J&J execute its 2-for-1 stock split? What effect did this transaction have on J&Js stockholders equity? What effect did this transaction have on J&Js stock price? On what date in June, 2001 did J&J execute its 2-for-1 stock split? What effect did this transaction have on J&Js stockholders equity? What effect did this transaction have on J&Js stock price?...
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Lecture20_more_stock_splits - stock split does not affect...

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