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Exercise 11-6 Stock dividends and per share book values LO P2

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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, 56,000 shares issued and outstanding	$	1,120,000
Paid-in capital in excess of par value, common stock		525,000
Retained earnings		675,000
Total stockholders’ equity	$	2,320,000

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 $39 per share on February 5 before the stock dividend. The stock’s market value is $35 per share on February 28.

Exercise 11-6 Part 2

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 immediately before and after the stock dividend of February 5. (Round your "Book value per share" answers to 3 decimal places.)

	Before After Book value per share Total book value of shares

Answer 1

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	No of Share previously outstanding	56000
	Stock Dividend 12%	6720
	Market Value	$                                     39
	Value of Stock Dividend	$                          262,080
	(18000*39)
	1. Entries to record declaration and distribution:
Date	Account	debit	credit
Feb 5	Retained Earning	$                          262,080
	Common Stock dividend distributable 6720*20		$                             134,400
	Paid in capital, in excess of par value, common stock		$                             127,680
Feb 28	Common Stock dividend distributable 6720*20	$                          134,400
	Common Stock 20 par value		$                             134,400
	2. Book Value:
	Book Value per share=	Total Stockholder Equity/No of Common Shares
		Working	Book Value per share A	No of Shares	Total Book Value
	Before Dividend:	2320000/56000	$                                  41.43	900	$                  37,286
	After Dividend:	2320000/(56000+6720)	$                                  36.99	1008	$                  37,286