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2-for-1 Stock Split - Warner Inc.

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Can you please assist me with the following:

Stock Split and Stock Dividend

The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.

(a) How much is the debit to retained earnings if the board votes a 2-for-1 stock split?

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Solution Summary

The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.

(a) How much is the debit to retained earnings if the board votes a 2-for-1 stock split?

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Sure, let's take a look.

The stock is currently $110 per share and they want to bring share price down, so they're increasing the number of shares before issuing more stock. (By the way, this is a common way to ...

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