The stockholders\' equity of TVX Company at the beginning of the day on February
ID: 2438262 • Letter: T
Question
The stockholders' equity of TVX Company at the beginning of the day on February 5 follows Common stock-$15 par value, 150,000 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity 750,000 525.000 675000 s 1950000 On February 5, the directors declare a 12% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock's market value is $45 per share on February 5 before the stock dividend. The stock's market value is $40 per share on February 28. 3.00 points 1. Prepare entries to record both the dividend declaration and its distribution. Journal entry worksheet Record the distribution of 12% stock dividend. Note: Enter debits before credits Date Debit Credit Feb 28Explanation / Answer
Answer:
1
Prepare entries to record both the dividend declaration and its distribution
Date
General Journal
Debit
Credit
5-Feb
Retained earnings
270,000
Common stock dividend distributable
90,000
Paid-in capital in excess of par value, Common stock
180,000
28-Feb
Common stock dividend distributable
90,000
Common stock, $15 par value
90,000
Working
Feb. 5
Shares to be issued: 50,000 shares × 12% = 6,000 shares
Retained earnings: (6,000 shares × $45) = $270,000
Common stock dividend distributable: 6,000 shares × $15 per share = $90,000
Paid-in capital in excess of par value, common stock: $270,000 – $90,000 = $180,00
_____________________________________________________________________________
2
Before
After
Book value per share
$39.00
$34.82
Total book value of shares
$23,400
$23,400
Working notes for the above answer is as under
Before
After
Total stockholders’ equity
1,950,000
1,950,000
Issued and distributable shares
÷
50,000
÷
56,000
Book value per share
39
34.821429
Shares owned
×
600
×
672
Total book value of shares
23400
23400
___________________________________________________________
3
5-Feb
28-Feb
Total market value of shares
$27,000
$26,880
Working notes for the above answer is as under
5-Feb
28-Feb
Market value per share
45
40
Shares owned
x 600
X 672
Total market value of shares owned
27000
26880
Date
General Journal
Debit
Credit
5-Feb
Retained earnings
270,000
Common stock dividend distributable
90,000
Paid-in capital in excess of par value, Common stock
180,000
28-Feb
Common stock dividend distributable
90,000
Common stock, $15 par value
90,000
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