Effects of Stock Dividends, Stock Splits, and Treasury Stock Transactions
At the beginning of the year, Sunstone, Inc., has total stockholders’ equity of $1,200,000 and 20,000 outstanding shares of a single class of capital stock. During the year, the corporation completes the following transactions affecting its stockholders’ equity accounts:
Jan. 16 | A 5 percent stock dividend is declared and distributed. (Market price, $100 per share.) |
Feb. 9 | The corporation acquires 300 shares of its own capital stock at a cost of $110 per share. |
Mar. 3 | All 300 shares of the treasury stock are reissued at a price of $130 per share. |
Jul. 5 | The capital stock is split 2-for-1. |
Nov. 22 | The board of directors declares a cash dividend of $12 per share, payable on January 22. |
Dec. 31 | Net income of $174,000 is reported for the year ended December 31. |
Instructions
Compute the amount of total stockholders’ equity, the number of shares of capital stock outstanding, and the book value per share following each successive transaction. Organize your solution as a three-column schedule with these separate column headings: (1) “Total Stockholders’ Equity,” (2) “Number of Shares Outstanding,” and (3) “Book Value per Share.”
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