Question

2. One stockholder owned 450 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.

Required information

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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, 71,000 shares issued and outstanding	$	710,000
Paid-in capital in excess of par value, common stock		525,000
Retained earnings		675,000
Total stockholders’ equity	$	1,910,000

On February 5, the directors declare a 16% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $41 per share on February 5 before the stock dividend. The stock’s market value is $35 per share on February 28.

Answer 1

1
	Before	After
Book value per share	$26.90	$23.19
Total book value of shares	$12,106	$12,106
	Before	After
Total stockholders’ equity	1,910,000	1,910,000
Issued and distributable shares 71000+16%	71,000	82360
Book value per share	26.90	23.19
Shares owned 450+16%	450	522
Total book value of shares	12106	12106
	5-Feb	28-Feb
Total market value of shares	$18,450	$18,270
	5-Feb	28-Feb
Market value per share	41	35
Shares owned	450	522
Total market value of shares owned	18450	18270