A Firm Decides to Issue Stock, Pursuant to a Stock

question 51

Multiple Choice

A firm decides to issue stock, pursuant to a stock split, on a 2-for-1 basis.What entry is necessary for this issuance?

• A)Retained Earnings Common Stock--Par Value
• B)Additional Paid-in Capital Common Stock--Par Value
• C)Retained Earnings Common Stock--Par Value
• Common Stock--Additional Paid-in Capital
• D)Common Stock--Par Value Common Stock--Additional Paid-in Capital
• Retained Earnings
• E)No journal entry is necessary but the par value of the stock must be restated on a per share basis.

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Definitions:

Voluntary Dimension

An aspect or attribute that is chosen freely or without compulsion, often relating to decisions or actions.

Profit Earning

The net income that a company generates, calculated as revenues minus expenses, taxes, and costs.