Question
In: Accounting
The stockholders' equity of TVX Company at the beginning of the day on February 5 follows:...
The stockholders' equity of TVX Company at the beginning of the day on February 5 follows:
|
Common stock -- $10 par value, 150,000 shares authorized, 67,000 shares issues and outstanding |
670,000 |
|
Paid-in capital in excess of par value, common stock |
525,000 |
|
Retained Earnings |
675,000 |
|
Total Stockholders' Equity |
1,870,000 |
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 $35.00 per share on February 28.
1. Prepare entries to record the dividend declaration and its distribution.
2. One stockholder owned 800 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.
3. Compute the total market value of the investor's shares in part 2 as of February 5 and February 28.
|
Feb 5 |
Retained Earnings |
||
|
Common stock dividend distributable |
|||
|
Paid in capital in excess of par value, common stock |
|||
|
Declared 12% stock dividend |
|||
|
Feb 28 |
Common stock dividend distributable |
||
|
Common stock |
|||
|
Distributed common stock dividend declared on Feb 5 |
|||
2.) One stockholder owned 550 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.)
3.) Compute the total market value of the investor’s shares in part 2 as of February 5 and February 28.
Solutions
Expert Solution
| Date | Account Description | Debit | Credit |
| 5-Feb | Retained Earnings(67000*12%*39) | $ 313,560 | |
| Common stock dividend distributable(67000*12%*10) | $ 80,400 | ||
| Paid in capital in excess of par value, common stock | $ 233,160 | ||
| (Being Stock Dividend Declared) | |||
| 28-Feb | Common stock dividend distributable | $ 80,400 | |
| Common Stock | $ 80,400 | ||
| (Being Shares issued) |
2.
| Before | After | |
| Total Stockholders' Equity | $ 1,870,000 | $ 1,870,000 |
| Total Number of Shares | 67,000 | 75,040 |
| Book Value per Share(1870000/67000) | $ 27.91 | $ 24.92 |
| No. of Shares Held before Dividend | 800 |
| Book Value of Shares(800*27.91) | $ 22,328 |
| No. of Shares Held before Dividend | 800 |
| Dividend Shares(800*12%) | 96 |
| No. of Shares Held after Dividend | $ 896 |
| Book Value of Shares(896*24.92) | $ 22,328 |
| 3 | |
| No. of Shares Held before Dividend | 800 |
| Market Value per share | $ 39 |
| Market Value of Share(800*39) | $ 31,200 |
| No. of Shares Held after Dividend | $ 896 |
| Market Value per share | $ 35 |
| Market Value of Share(896*35) | $ 31,360 |
| Part 2 | |
| 2 | |
| No. of Shares Held before Dividend | 550 |
| Book Value of Shares(550*27.91) | $ 15,351 |
| No. of Shares Held before Dividend | 550 |
| Dividend Shares(550*12%) | 66 |
| No. of Shares Held after Dividend | $ 616 |
| Book Value of Shares(616*24.92) | $ 15,351 |
| 3 | |
| No. of Shares Held before Dividend | 550 |
| Market Value per share | $ 39 |
| Market Value of Share(550*39) | $ 21,450 |
| No. of Shares Held after Dividend | $ 616 |
| Market Value per share | $ 35 |
| Market Value of Share(616*35) | $ 21,560 |
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ekkarill92 answered 1 year agoRelated Solutions
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