2.
Before | After | |
Book value per share | $ 38.462 | $ 33.738 |
Total book value of shares | $ 30,770 | $ 30,769 |
Note: There is a $1 difference in the total book value of shares before and after the stock dividend due to rounding off.
Working:
Book value per share = Total stockholders' equity/Number of shares of common stock outstanding
Before:
Book value per share = $2500000/65000 = $38.4615 = $38.462
Total book value of shares = 800 x $38.462 = $30769.60 = $30770
After:
The stock dividend will not change the total stockholders' equity though there will be a change intra-accounts within the stockholders' equity. The number of shares of common stock outstanding will increase to the extent of the stock dividend, which will result in a decline in the book value per share.
Stock dividend = 14% x 65000 = 9100
Number of shares of common stock outstanding = 65000 + 9100 = 74100
Book value per share = $2500000/74100 = $33.7382 = $33.738
Number of shares post stock dividend = 800 + (14% x 800) = 800 + 112 = 912
Total book value of shares = 912 x $33.738 = $30769.056 = $30769
3.
February 5 | February 28 | |
Total market value of shares | $ 27,200 | $ 27,360 |
(800 x $34) | (912 x $30) |
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