Question

Alex purchased 200 shares of ABC stock on June 2nd 2017, for $1,200. And November 2018, ABC issued a 10% stock dividend. Alex now owns 220 shares and his bases is

EXCEPT Royalty inoome Taseemp inome Original sse discnunt Ordinary dhvidend inonme Mark for oow Queetion 27 of 76 Alex purchased 200 shares of ABC atock on June 2, 2017, for $1,200. In November 2018, ABC issued a 10% stock dividend. Alex now owns 220 shares and his basis is $1.080 basis O $1.200 basis $1,320 bess $1.452 basis Mark for follow up Question 28 of 76 The basis of mutual fund shares can be determined using all of the following methods EXCEPT Double calegory Average basis O Specific share identification. OFirst-in, first-out

Answer 1

Alex now owns 220 shares and his bases is:

Ans: ( B) $ 1200 Basis.

Explanation:

(1) when company issued stock dividend only the number of share increases, total stockholder's equity remain same.Hence basis will still remain $ 1200 , reducing the price per share.

( 2) It affects only stockholder's equity part of a balance sheet. Stock div.reduces the balance of retained earnings and increse the common stock leaving the total unchanged.

(2) The basis of mutual fund shares can be determined using all of the following methods EXCEPT

Ans: (A) Double category

(Rest all the methods are used for determining basis of mutual fund.)