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—$20 par value, 150,000 shares authorized, 51,000 shares issued and outstanding	$	1,020,000
Paid-in capital in excess of par value, common stock		525,000
Retained earnings		675,000
Total stockholders’ equity	$	2,220,000

On February 5, the directors declare a 18% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $47 per share on February 5 before the stock dividend. The stock’s market value is $40 per share on February 28.

1. One stockholder owned 400 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 2 decimal places. Round "Total book value of shares" to the nearest whole dollar.)

	Before	After
Book value per share
Total book value of shares

2. Compute the total market value of the investor’s shares in part 2 as of February 5 and February 28.

	February 5	February 28
Total Market Value of Shares

Solutions

Expert Solution

	Before	After
Book value per share	$43.53	$36.89
Total book value of shares	$17,412	$17,412

Book value per share Before

= $22,20,000 / 51,000

= $43.53

Book value per share After

= $22,20,000 / (51,000 x 118%)

= $36.89

Total book value of shares Before

= 400 x $43.53

= $17,412

Total book value of shares After

= (400x118%) x $36.89

= $17,412

2. Compute the total market value of the investor’s shares in part 2 as of February 5 and February 28.

	February 5	February 28
Total Market Value of Shares	$18,800	$18,880

February 5

Market value = $47

Total market value = $47 x 400 = $18,800

February 28

Market value = $40

Total market value = $40 x (400 x 118%) = $18,880

ekkarill92 answered 1 year ago

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