Chicago Clock Corporation issued a 3-for-2 stock split of its common stock,which had a par value of $100 before the split.What dollar amount of retained earnings should be transferred to the common stock account?
A)Par value of $100 per share.
B)Market value per share on the issue date.
C)Half of the previous total amount in the common stock account.
D)Retained earnings are not transferred to the common stock account.

Question

Quizplus · Accepted Answer

In a stock split, the company increases the number of shares outstanding by issuing more shares to current shareholders. This does not involve transferring funds from retained earnings to the common stock account. The par value per share is adjusted to reflect the split, but this adjustment does not involve moving funds between accounts.

Chicago Clock Corporation Issued a 3-For-2 Stock Split of Its