Stock Dividend-Effect on Book Value
Olympic Corporation Has 75,000 Shares $\$\_\_\_\_\_$

question 84

Essay

Stock dividend-effect on book value
Olympic Corporation has 75,000 shares of $1 par value stock outstanding. The largest single stockholder is Lou Cheng, who owns 6,000 shares. On December 31, the total assets of the company amount to $4,360,000 and total liabilities to $2,230,000. On that date, the board of directors declared a stock dividend of one new share for each five shares outstanding. Compute the following:
(a) Book value per share before the stock dividend $\$\_\_\_\_\_$ per share
(b) Book value per share after stock dividend $\$\_\_\_\_\_$
(c) Total book value of Lou Cheng 's stockholdings per share before the stock dividend $\$ \_\_\_\_\_$
(d) Total book value of Lou Cheng 's stockholdings after the stock dividend $\$\_\_\_\_\_$

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Definitions:

Disparity of Income

The gap in income and wealth distribution among individuals or groups within a society, leading to economic inequality.

Nominal Wages

The amount of money paid to employees without adjustment for inflation, reflecting the face value rather than the real purchasing power.

Real Wages

The buying capacity of earnings, when accounted for inflation, showing the amount of goods and services that can be purchased.

CPI

The Consumer Price Index is an indicator that calculates the overall average prices of a selection of consumer items and services, including food, transportation, and healthcare, which is utilized to measure inflation.