GameStop issued the following press release when the company’s stock was selling for $27 per share: GRAPEVINE, Texas—(BUSINESS WIRE)—Feb. 12, 2007—GameStop Corp. (NYSE: GME), the world’s largest video game and entertainment software retailer, today announced that its Board of Directors approved a two-for-one stock split of the Company’s common stock to be effected in the form of a stock dividend.

Each shareholder of record at the close of business on February 20, 2007, will receive one additional share of GameStop common stock for every outstanding share held on the record date. The additional shares will be distributed on March 16, 2007.

“As GameStop continues to rapidly grow, we wanted to make our stock more attractive to a broader range of potential investors. This stock split also reinforces the confidence that the Board and I have in the GameStop buy, sell, trade strategy and the future of video game growth worldwide,” indicated R. Richard Fontaine, Chairman and Chief Executive Officer.

The stock split is GameStop’s first since becoming a publicly traded company in February 2002. GameStop had approximately 76 million common shares outstanding as of February 3, 2007. Upon completion of the split, the outstanding shares of GameStop’s common stock (par value $0.01) will increase to approximately 152 million.

Required:

1. Give any journal entries that would be required.

2. Describe the impact that this transaction will have on future cash dividends.