Exercise 11-6 Stock dividends and per share book values LO P2 [The following inf
ID: 2533518 • 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: Common stock-$20 par value, 150,000 shares authorized, 1,220,000 61,000 shares issued and outstanding $ Paid-in capital in excess of par value, Retained earnings Total stockholders' equity 525,000 common stock 675,000 $2,420,000 On February 5, the directors declare a 14% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock's market value is $46 per share on February 5 before the stock dividend. The stock's market value is $40 per share on February 28Explanation / Answer
2. One stockholder owned 650 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
$16.13
$14.15
Total book value of shares
$10,485
$10478
Book value per share Before
= $24,20,000 / 150,000
= $16.13
Book value per share After
= $24,20,000 / (150,000 x 114%)
= $14.15
Total book value of shares Before
= 650 x $16.13
= $10,485
Total book value of shares After
= (650x114%) x $14.15
= $10478
3. Compute the total market value of the investor’s shares in part 2 as of February 5 and February 28.
February 5
February 28
Total Market Value of Shares
$29,900
$29,640
February 5
Market value = $46
Total market value = $46 x 650 = $29,900
February 28
Market value = $40
Total market value = $40 x (650 x 114%) = $29,640
Before
After
Book value per share
$16.13
$14.15
Total book value of shares
$10,485
$10478
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