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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, 66,000 shares issued and outstanding	$	660,000
Paid-in capital in excess of par value, common stock		525,000
Retained earnings		675,000
Total stockholders’ equity	$	1,860,000

On February 5, the directors declare a 10% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $33 per share on February 5 before the stock dividend. The stock’s market value is $30 per share on February 28.

1. Prepare entries to record both the dividend declaration and its distribution.
2. One stockholder owned 850 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.

Answer 1

1)

Date		Debit	Credit
Feb-05	Retained earnings	$    217,800.00
	Common Stock dividend distributable		$    66,000.00
	Paid in capital in excess of par value. Common stock		$ 151,800.00
Feb-28	Common Stock dividend distributable	$      66,000.00
	Common Stock $10 Par Value		$    66,000.00

2)

	Before	After
Total Stockholders Equity	$ 1,860,000.00	$ 1,860,000.00
Issued and distributable shares	66,000.00	72,600.00
Book Value Per share	$                28.18	$                25.62
Shares Owned	850.00	935.00
Total book value of shares	$        23,954.55	$        23,954.55

3)

	Feb-05	Feb-28
Market value per share	33	30
Shares owned	850.00	935.00
Total market value of shares owned	28,050.00	28,050.00