1. Suppose AT&T had originally issued 200 million shares of common stock , $1 par, for $15...

Question:

1. Suppose AT&T had originally issued 200 million shares of common stock, $1 par, for $15 cash per share many years ago. Prepare the journal entry.

2. Suppose AT&T had retained earnings of $5 billion by December 31, 20X2. The board of directors declared a two-for-one stock split and immediately exchanged two $.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 one additional $1 par share was issued by AT&T for each share outstanding (instead of exchanging shares) and accounted for as 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 1,000 shares of AT&T 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...