In an ordinary stock split, the club receives additional shares based on the number of shares owned. For example, in a 3-for-2 split, the shareholders receive one additional share for every two shares owned. A stock split can include a fractional share that is sold and cash is paid to the club. This cash often appears on statements as cash-in-lieu. In a reverse stock split, the issuing company replaces the currently owned shares with fewer shares.
Note: Stock splits do not affect a security's total cost basis. The original cost is simply spread over a different number of shares. You can think of a stock split as a making change for a dollar a 4:1 split is no different than changing a dollar for four quarters. In both cases, you still have $1 in your hand, whether its four quarters or a single dollar bill. Also, a stock split does not affect the returns of your club portfolio.
To enter a new Stock Split transaction in Club Accounting Online
Select Accounting > Securities > Stock Split
Date- type the date directly into the Date field.
Symbol from the drop-down list, choose the Parent company, the one that issued the split.
Click continue to move to the next page.
Shares After Split Enter the number of shares in the stock you own after the split, including any fractional shares.
Note: If your statement shows a whole number of shares but this field shows a whole number plus a fractional amount, such as 17.2, the program is not wrong. You should have received cash for the fractional share, which is entered in the next field below. Club Accounting will record the sale of the fractional share for the amount entered in the Cash Payment for Fractional Share field and the club will be left with a whole number of shares.
Split Ratio For a standard split, the first number is greater than the second. For example, 2:1 means you get two shares of stock for every one you owned. For a reverse split, the first number is less than the second. For example, 1:3 means you got 1 share for every three you owned. If you entered the Shares After Split correctly, the software will fill this out for you.
Cash for Fractional Shares Enter any cash received in place of a fractional share. Club Accounting will then automatically enter a Sell transaction for the fractional share for you for this amount and any fractional share entered in the Shares Received field.
Account- select the account to receive any cash-in-lieu from this transaction. The dropdown list includes all active accounts.
