Chapter 13, Problem E13.29E

To determine

Stock split:

The Stock split is a process undertaken by the corporation in which it divide its share of larger nominal value in to large number of shares of smaller nominal value. The process is undertaken by the company to reduce the market value of its shares and to keep it under control as it will get diluted in larger number of shares.

The effect of stock split is that there is no change in total stockholder’s equity or any other account in the Stockholder’s equity section amount-wise. Rather just the par value of authorized and issued stock capital of respective category gets diluted by increasing the number of shares.

There is not journal entry is passed for there is no change in amount of stock capital. However, a memorandum journal entry without any debit and credit amount is passed in the books by debiting the stock capital (gets splitted) with nominal value and crediting it with new nominal value for getting it changed in the books.

Requirement:

The Stockholder’s equity section of Balance Sheet after stock split.