Wide World Corporation issued a 3-for-2 stock split (i.e., three new shares in exchange for each two old shares turned in) of its common shares which had a market value of $100 before the split. What dollar amount of retained earnings should be transferred to the common share account?
A) Half of the previous total amount in the common share account(s).
B) Market value before the split.
C) Market value after the split.
D) None should be transferred.

Question

Quizplus · Accepted Answer

In a stock split, no retained earnings are transferred to the common share account. The number of shares increases, but the total equity remains unchanged.

Wide World Corporation Issued a 3-For-2 Stock Split (I