Required Informetlon The following Information applies to the questions displaye
ID: 2590816 • Letter: R
Question
Required Informetlon 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-$5 par value, 158,88 shares authorized, 61,88e shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity 385,eee 525,88 675,88e $1,585,800 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 ls $30 per share on February 28. 2. One stockholder owned 900 shares on February 5 before the dividend. Compute the book value per share and total book value of this stockholder's shares Immedlately before and after the stock dividend of February 5. (Round your "Book value per share" answers to 3 decimel places.) Before After Book value per share Total book value of sharesExplanation / Answer
Note : A stock dividend is not a cash dividend ie it is issued by corporation to its shareholders without any consideration. When stock dividend is distributed an amount( stock dividend * fair value * number of shares) is transferred from Retained Earning to Common stock & Paid in capital in excess of Par.
In the present case fair value is maket value on Feburary 5 is to be consider to calculate number of equity shares given equivalent to stock dividend.
Answer
Book Value per share before stock dividend on 5 February = $1,505,000 / 150,000 shares = $10.033
Total Book Value of the shareholder = 900 shares * $10.033 = $9,029.70 or $9,030.
Number of commom shares issued equivalent to stock dividend = 150,000 * 16 % = 24,000 shares
Book Value per share after stock dividend on 5 February = $1,505,000 / (150,000 + 24,000) shares = $8.649
Total Book Value of the sharesholder = 900 shares * $8.649 = $7,784.10 or $7,784
Before ($) After ($) Book Value per share $10.033 $8.649 Total Book Value of the shares $9,029.70 or $9,030. $7,784.10 or $7,784Related Questions
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