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    goroski13marino's Avatar
    goroski13marino Posts: 1, Reputation: 1
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    #1

    Dec 13, 2010, 08:40 PM
    Debit or credit in journal
    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's Avatar
    Just Looking Posts: 1,610, Reputation: 480
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    #2

    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's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #3

    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.
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