SPLIT: William Wrigley Jr. Co. (WWY) - Common stock and Class B

Issue:

How do I enter the 05/02/06 William Wrigley Jr. Co. (WWY) stock split?

Cause:

Refer to the William Wrigley Jr. Co. (WWY) website: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=WWY&script=11978&item_id='faq.htm'

Resolution:

On 02/05/2006, William Wrigley Jr. Co. (WWY) announced a stock split on its regular common stock and its Class B common stock [now WWYWB.OB, was WWYB]. Shareholders of each class received 1 share of Class B stock for every 4 shares they held of either class.

Because holders of the Common stock also received Class B stock, they enter their new shares of Class B stock as a stock spin-off with the Remaining Basis Percentage of 80%. Class B shareholders enter the new shares as a five-for-four (5:4) stock split. The situation is complicated further by the fact that WWY paid cash dividends on both classes of stock on May 2. Holders of both classes of stock must enter the receipt of these additional shares on May 2, 2006, before any reinvestment of shares from the cash dividend.

Let’s take an example where a club owned both Wrigley common shares and Wrigley Class B common shares. Assume the club had 103 shares of WWY and 53 shares of WWYWB.OB, formerly WWYB.

We will account for the additional shares received because of the stock dividend on the Class B shares first. Note that if the club did not hold Class B shares, this paragraph should be skipped. First, you should edit the security profile, and change the ticker symbol from WWYB to WWYWB.OB. Then, go to Accounting, Stock Split. Date will be 5/1/06. Symbol will be WWYWB.OB. Click on Continue. You had 53 shares, and are now receiving an additional 13.25. To compute the number of additional shares, divide the original number of shares by 4, carrying out the fractional portion. In this case, you would enter 66.25 for shares after split. For Split Ratio, enter 5 for 4. If you have received cash in lieu of fractional shares from the broker, enter that amount. Otherwise, leave it at zero and enter a sale for the fractional portion at a later date, when the money is received. Select the bank where the money, if any, was deposited. Click on Submit.

As stated previously, we will be entering the additional shares received because of our ownership of the regular common shares [WWY], as a spin-off. Go to Accounting, Securities. Select Spinoff. Enter 5/1/06 for the date. Select WWY for the Symbol. Enter 1, for Number of Daughter Companies. Click Continue. Click the button for Remaining Basis Percentage. Enter 80 in the percentage box. Note: it is very important that both the button has been selected and the 80 has been entered. Enter WWYWB.OB for the Symbol. Enter 25.75 as the number of shares received. Again, you compute this number by dividing the number of WWY shares held by 4, in our example 103 divided by 4. Enter $47.10 for the price. If you have received cash in lieu of fractional shares from the broker, enter that amount. Otherwise, leave it at zero and enter a sale for the fractional portion at a later date, when the money is received. Select the bank where the money, if any, was deposited. Click on Submit.

For a step-by-step of this procedure, I recommend printing out this sheet and filling out the blanks.

Step 1) If you entered any part of this transaction, delete those transactions from the software.

Step 2) Did you own WWYWB.OB shares? If not, skip this step and go to Step 3

a) Change the ticker symbol from WWYWB.OB to WWYB.
b) Enter the split - go to TRANSACTIONS > STOCK SPLIT (CA3) or ACCOUNTING > SECURITIES > STOCK SPLIT (CAO)
c) Transaction Date = 05/01/2006
d) Transaction Type = Stock Split
e) Select Account = your choice
f) Select Security = WWYB
g) Split Ratio = 5 for 4
h) Shares after split = automatically calculated
i) Cash payment after fractional = the fraction of a share (the amount after the decimal point in 2h, above) * $47.10 (the price of the stock that day)
j) Click OK

Step 3) Enter the additional shares received as a spinoff

a) Enter the split - go to TRANSACTIONS > SPINOFF (CA3) or ACCOUNTING > SECURITIES > SPINOFF (CAO)
b) Transaction Date = 05/01/2006
c) Transaction Type = Spinoff
d) Select Account = your choice
e) Select Parent Security = WWY
f) Select Remaining Basis Percentage = 80 (leave Old Security Price per Share blank)
g) Next to WWYB under SPINOFF SECURITY, enter the full number of shares received, including any fractions. If WWYB is not a choice on the list, click NEW SECURITY to add it to the list.
h) Enter the price per share of $47.10.
i) Cash received = the fraction of a share (the amount after the decimal point in 2g, above) * $47.10 (the price of the stock that day)
j) Click OK