1. Almer Company issued 100,000 shares of common stock , $5 par, for $40 cash per share...

Question:

1. Almer Company issued 100,000 shares of common stock, $5 par, for $40 cash per share on December 31, 20X1. Prepare the journal entry.

2. Almer Company had retained earnings of $3.5 million by December 31, 20X5. The board of directors declared a two-for-one stock split and immediately exchanged two $2.50 par shares for each share outstanding. Prepare the journal entry, if any. Present the stockholders’ equity section of the balance sheet before and after the split.

3. Repeat requirement 2, but assume that instead of exchanging two $2.50 par shares for each share outstanding, one additional $5 par share was issued for each share outstanding. Almer said it issued a two-for-one stock split “effected in the form of a stock dividend.”

4. What journal entries would be made by the investor who bought 2,000 shares of Almer Company common stock and held this investment throughout the time covered in requirements 1, 2, and 3?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...