3: Chapter 21 Quiz Help Save & Exit Submit Saved A corporation had 60,000 shares

Question

3: Chapter 21 Quiz Help Save & Exit Submit Saved A corporation had 60,000 shares of $8 par value common stock outstanding on November 1 with no preferred stock Issued or outstanding. The company's retained earnings was $250,000 and total stockholders' equity was $800,000. Later that day, the board declared a 10% stock dividend when the market value of each share was $25. Shortly after declaration, the market value fell to $22.50 per share. Sam Lewis owned 350 shares of stock prior to the declaration. After the stock dividend, the total book value of Lewis' stock after recelving additional shares was: ao :50:44 ook Multiple Choice int $5,132 $2,800 $4,666

Explanation / Answer

The book value per share after and before stock dividend will be same. Total shares outstanding after stock dividend=60000*1.1=66000 Total shares outstanding of Lewis after stock dividend=350*1.1=385 The total book value of Lewis' stock=800000/66000*385= $4666 Option 3 is correct

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