The only journal entry needed for a stock split is a memo entry to note that the number of shares changed and that the par value per share has changed (if the stock has a par value). However, a typical journal entry with debits and credits is not needed since the total dollar amounts for the par value and other components of paid-in capital and stockholders’ equity do not change.

For example, if a corporation has 100,000 shares of $1.00 par value stock and it declares a 2-for-1 stock split, the corporation will have 200,000 shares with a par value of $0.50 per share. Before and after the stock split, the total par value is $100,000. Other account balances within stockholders’ equity also remain the same.

Learn more about Stockholders’ Equity.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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