View Full Version : Debit or credit in journal
goroski13marino
Dec 13, 2010, 08:40 PM
The board of directors reduced the par of common shares from $100 to $20. This action increased the number of outstanding shares to 500,000.
Just Looking
Dec 13, 2010, 09:01 PM
I assume you are talking about a stock split, where originally there were 100,000 shares at $100, and now there are 500,000 shares at $20.
If this is the case, an entry is not needed. You would put a footnote in the financial statements to explain the change.
rehmanvohra
Dec 14, 2010, 12:57 AM
I think perhaps you need to make a memorandum entry:
Debit Common Stock $100 par
Credit Common stock $20 par
In the Balance Sheet the share capital will be reported as:
500,000 Common Stock $20 par... $100,000
The accompanying note to the financial statements will disclose the details of stock split referring to the authorization by the members as well as compliance of the legal formalities.