required information\nthe following information applies to the questions displayed below.\nthe stockholders…

required information\nthe following information applies to the questions displayed below.\nthe stockholders equity section of tvx company on february 4 follows.\ncommon stock-$20 par value, 150,000 shares authorized, 57,000 shares issued and outstanding $1,140,000\npaid-in capital in excess of par value, common stock 420,000\nretained earnings 548,000\ntotal stockholders equity $2,108,000\non february 5, the directors declare a 2% stock dividend distributable on february 28 to the february 15 stockholders of record. the stocks market value is $36 per share on february 5 before the stock dividend.\n2. prepare the stockholders equity section after the stock dividend is distributed. (assume no other changes to equity.)\ntvx company\nstockholders equity section of the balance sheet\nfebruary 28\ntotal stockholders equity

required information\nthe following information applies to the questions displayed below.\nthe stockholders equity section of tvx company on february 4 follows.\ncommon stock-$20 par value, 150,000 shares authorized, 57,000 shares issued and outstanding $1,140,000\npaid-in capital in excess of par value, common stock 420,000\nretained earnings 548,000\ntotal stockholders equity $2,108,000\non february 5, the directors declare a 2% stock dividend distributable on february 28 to the february 15 stockholders of record. the stocks market value is $36 per share on february 5 before the stock dividend.\n2. prepare the stockholders equity section after the stock dividend is distributed. (assume no other changes to equity.)\ntvx company\nstockholders equity section of the balance sheet\nfebruary 28\ntotal stockholders equity

Answer

Explanation:

Step1: Calculate the number of shares issued as stock dividend

Number of shares issued as stock dividend = Number of outstanding shares × Stock dividend percentage Number of outstanding shares = 57,000 Stock dividend percentage = 2% = 0.02 Number of shares issued as stock dividend = (57000\times0.02 = 1140)

Step2: Calculate the increase in common stock (at par value)

Par value per share = $20 Increase in common stock = Number of new shares × Par value per share Increase in common stock = (1140\times20=$22,800) New common stock balance = (1,140,000 + 22,800=$1,162,800)

Step3: Calculate the increase in paid - in capital in excess of par value

Market value per share = $36 Amount per share in excess of par = (36 - 20=$16) Increase in paid - in capital in excess of par value = Number of new shares × Amount per share in excess of par Increase in paid - in capital in excess of par value = (1140\times16=$18,240) New paid - in capital in excess of par value balance = (420,000+18,240 = $438,240)

Step4: Calculate the decrease in retained earnings

Decrease in retained earnings = Number of new shares × Market value per share Decrease in retained earnings = (1140\times36=$41,040) New retained earnings balance = (548,000 - 41,040=$506,960)

Answer:

TVX COMPANY - Stockholders’ Equity Section of the Balance Sheet - February 28
Common stock - $20 par value, 150,000 shares authorized, (57000 + 1140=58140) shares issued and outstanding ($1,162,800)
Paid - in capital in excess of par value, common stock ($438,240)
Retained earnings ($506,960)
Total stockholders’ equity ($1,162,800+438,240 + 506,960=$2,108,000)