Required information The following information applies to the questions displaye
ID: 2340263 • Letter: R
Question
Required information The following information applies to the questions displayed below The stockholders' equity of TVX Company at the beginning of the day on February 5 follows: Part 2 of3 10 points Common stock-$1e par value, 150,ee8 shares authorized, 60,808 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity S 600,000 425,000 558,000 $1,575,800 eBook Hint Reterences y t stock s of On February 5, the directors declare a 20% stock dividend distributable on February28 to the Feb record. $33.40 per share on February 28. The stock's market value is $40 per share on February 5 before the stock dividend. The stock's market value is and total book value of 2. One stockholder owned 800 shares on February 5 before the dividend. Compute the book value per share this stockholder's shares immediately before and after the stock dividend of February 5. (Round your "Book value per share" answers to 3 decimal places.) Before After Book value per share Total book value of shares Graw O Type here to searchExplanation / Answer
Answer
Date
Particulars
Dr. $
Cr. $
5-Feb-18
Retained Earnings (12,000 Shares * $40 per share)
480,000.00
Common Stock Dividend Payable (12,000 Shares * $10 per share)
120,000.00
Paid-In-Capital In excess of par (12,000 Shares * $30 per share)
360,000.00
(Being 20% Stock dividend declared, 60,000 Shares * 20% = 12,000 Shares)
28-Feb-18
Common Stock Dividend Payable
120,000.00
Common Stock
120,000.00
(Being stock dividend paid)
Book Value per Share
Book Value = Total Shareholder’s Equity / No. of Shares Outstanding
Before
Book Value = $1,575,000 / 60,000 Shares
Before Book Value = $26.25 per share
Total Book Value of Shares
= $26.25 per share * 800 Shares
Total Book Value of Shares Before Dividend = $21,000
After
There will be n change in Total Shareholder’s Equity as Retained Earnings is decreasing by $480,000 and Common Stock and paid in capital are both increasing by $480,000, so the net effect is Nil.
This will increase the No. of Outstanding shares by 12,000, so New Outstanding Shares are 72,000.
Book Value = $1,575,000 / 72,000 Shares
After Book Value = $21.875 per share
Total Book Value of Shares
= $21.875 per share * 800 Shares
Total Book Value of Shares After Dividend = $17,500
Dear Student, if u have any doubt, plz feel free to reach me.
Date
Particulars
Dr. $
Cr. $
5-Feb-18
Retained Earnings (12,000 Shares * $40 per share)
480,000.00
Common Stock Dividend Payable (12,000 Shares * $10 per share)
120,000.00
Paid-In-Capital In excess of par (12,000 Shares * $30 per share)
360,000.00
(Being 20% Stock dividend declared, 60,000 Shares * 20% = 12,000 Shares)
28-Feb-18
Common Stock Dividend Payable
120,000.00
Common Stock
120,000.00
(Being stock dividend paid)
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