Question

[The following information applies to the questions displayed below.) The stockholders' equity of TVX Company at the beginning of the day on February 5 follows. Common stock-$20 par value, 150,000 shares authorized, 64,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $1,280,000 425,000 546,000 $2,251,000 On February 5, the directors declare a 2% stock dividend distributable on February 28 to the February 15 s record. The stock's market value is $41 per share on February 5 before the stock dividend. 2. Prepare the stockholders' equity section after the stock dividend is distributed. (Assume no other changes to e TVX COMPANY Stockholders' Equity Section of the Balance Sheet February 28 $ 0 Total stockholders' equity

Answer 1

TVX COMPANY Stockholders' Equity Section of the Balance Sheet February 28
Common stock $ 20 par, 150,000 shares authorized and 65,280 shares issued and outstanding	$ 1,305,600 ( $ 1,280,000 + $ 25,600 )
Add: Paid in capital in excess of par value, common stock	$ 451,880 ( $ 425,000 + $ 26,880 )
Add: Retained earnings             ( $ 546,000 (-) [ 1,280 shares x $ 41 ]	$ 493,520
Total Stock holders equity	$ 2,251,000
Workings :
Stock Dividend         = 64,000 shares x 2%	1,280 shares
Total Shares issued   = 64,000 + 1,280 = 65,280 shares
Increase in Value of Stock          = 1,280 Shares x $ 20	$ 25,600
Change in Paid in Capital              = 1,280 shares x ( $ 41 (-) $ 20 )	$ 26,880