Stock Split and Stock Dividend Accounting Journal Entry Examples Help

Stock Split and Stock Dividend Accounting Journal Entry Examples, Concepts, Illustrations, Sample Help Online

 

Looking for Stock Split and Stock Dividend Accounting Journal Entry Examples, Concept, Illustrations and Calculation to do your assignments, homework or project then you are at the correct place.
 

Understanding the concept of Stock Split and Stock Dividend

 
Stock Split: It is an action by which a company increases the number of shares and reduces the par value per share by a stipulated ratio. This increases the number of shares but reduces the value per share. This action does not have any change in the firm’s economy.
 

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Let’s understand the concept with help of an example.
 
For example, a 2-for-1 stock split would double the number of shares outstanding and halve the par value per share that is a shareholder owning 1,000 shares out of 100,000 would then own 2,000 shares out of 200,000
Stock Dividend involves the issuance of additional shares of stock to existing shareholders on a proportional basis. Suppose, a shareholder owning 100 shares of stock will own 125 shares after a 25% stock dividend. Importantly, all shareholders would have 25% more shares, so the percentage of the total outstanding stock owned by a specific shareholder is not increased.
 
1,000,000 shares of $1 par value stock outstanding. The market price per share is $20 on the date that a stock dividend is declared and issued Small Stock Dividend: Assume a company issues a 10% Stock Dividend
Retained earnings 2000000
Common Stock 100000
Paid in capital in excess of par 1900000
 
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