Ben owns 1,000 shares of XYZ corp. worth $10,000. During the year he receives an additional...

Ben owns 1,000 shares of XYZ corp. worth $10,000. During the year he receives an additional 200 shares of this stock as a stock dividend. His shares are now worth $12,500. How much income does Ben have to income in income because of the stock dividend?

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Expert Solution

Ben owns 1000 shares of XYZ corp worth $10000.

The value of each share = $10000 ÷ 1000 shares

= $10

The value of each share before receiving stock dividend = $10 per share

During this year he receives 200 additional shares of this stock as stock dividend.

Total number of shares after receiving stock dividend :-

= 1000 shares + 200 shares

= 1200 shares

The worth of all the 12000 shares are $12500

Ben has got 200 shares as stock dividend.

The income of Ben because of the stock dividend = value per share before stock dividend × number of shares received as stock dividend

Income because of stock dividend :-

= $10 × 200 shares

= $2000

Ben's income because of stock dividend = $2000

These are all the information required to solve the above given question.

if there is any clarification required regarding the above provided answer, please mention them in comment box.

I hope, all the above provided information and calculations are useful and helpful to you.

Thank you.

ekkarill92 answered 1 year ago

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