The stockholders equity of TVX Company at the beginning of the day on February 5 follows: Common

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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, 60,000 shares issued and outstanding . . . . . . . . $ 600,000
Paid- in capital in excess of par value, common stock . . . . . 425,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,575,000

On February 5, the directors declare a 20% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $ 40 per share on February 5 before the stock dividend. The stock’s market value is $ 33.40 per share on February 28.
1. Prepare entries to record both 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.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Fundamental accounting principle

ISBN: 978-0078025587

21st edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

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