Exercise 11-6 Stock dividends and per share book values LO P2 [The following inf
ID: 2530125 • Letter: E
Question
Exercise 11-6 Stock dividends and per share book values LO P2
[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:
On February 5, the directors declare a 16% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $35 per share on February 5 before the stock dividend. The stock’s market value is $30 per share on February 28.
Exercise 11-6 Part 2
2. One stockholder owned 700 shares on February 5 before the dividend. Compute the book value per share and total book value of 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.)
authorized, 51,000 shares issued and outstanding $ 255,000 Paid-in capital in excess of par value, common stock 525,000 Retained earnings 675,000 Total stockholders’ equity $ 1,455,000
Explanation / Answer
2. One stockholder owned 700 shares on February 5 before the dividend. Compute the book value per share and total book value of this stockholder’s shares immediately before and after the stock dividend of February 5
Before
After
Book value per share
$28.529
$24.594
Total book value of shares
$19,970.3
$19,970.3
Book value per share Before
= $14,55,000 / 51,000
= $28.529
Book value per share After
= $14,55,000 / (51,000 x 116%)
= $14,55,000 / 59,160
= $24.594
Total book value of shares Before
= 700 x $28.529
= $19,970.3
Total book value of shares After
= (700x116%) x $24.594
= $19,970.30
Before
After
Book value per share
$28.529
$24.594
Total book value of shares
$19,970.3
$19,970.3
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