A company had the following stockholders' equity on January 1: Common Stock ? $1 par value; 1,000,000 shares authorized, 350,000 shares issued and outstanding …………………….$ 350,000Paid-in capital in excess of par value, common stock ……....700,000Retained earnings ……………………………………………364,000Total stockholders' equity ……………………………………$1,414,000??On January 10, the company declared a 40% stock dividend to stockholders of record on January 25, to be distributed January 31. The market value of the stock on January 10 prior to the dividend was $20 per share. What is the book value per common share on February 1?
What will be an ideal response?
Total stockholders' equity does not change; however, the number of shares outstanding is now 350,000 shares + (350,000 shares * .40) = 490,000 shares.
Book value per share = $1,414,000/490,000 shares = $2.89/common share
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