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Is a journal entry required for a stock split?

Asked by: Messaouda Esclapez

asked in category: General Last Updated: 12th May, 2020

Is a journal entry required for a stock split?

A stock split does not require any journal entries in the accounting records as there has been no change in the total equity of the business. A memo entry is normally made to reflect the fact that the split has occurred and that the par value has changed proportionally.

Moreover, what is the journal entry for a stock split?

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

Subsequently, question is, how does a stock split affect the balance sheet? A stock split will not change the general ledger account balances and therefore will not change the dollar amounts reported in the stockholders’ equity section of the balance sheet. (Although the number of shares will double, the total dollar amounts will not change.)

Beside this, what journal entry is required to account for a 2 for 1 stock split?

For example, a 2-for-1 stock split would reduce the par value of each share of stock by 50 percent. No account is debited, but a memo entry should be made on the company’s balance sheet indicating the change in the company’s per share par value.

Does a stock split increase assets?

Stock Split OverviewThis type of dividend does not involve the reduction of any company assets (since no cash is being paid out), nor does it increase the cash inflow to the recipient.

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