LTI Corp.purchased 500 shares as a short-term investment for $5,100 on January 4,2017.The company received a 100% stock dividend on November 30,2017.The market value of one share on December 31,2017 was $6.30.The cost per share as at December 31,2017,would be:

Question

Quizplus · Accepted Answer

When a 100% stock dividend is received, the total number of shares increases by 100%. So, instead of 500 shares, the company now holds 1000 shares. However, the total cost of investment remains the same, i.e., $5,100. 
Therefore, the cost per share as at December 31, 2017, would be:
Total cost of investment/total number of shares = $5,100/1000 = $5.10 per share. 
Hence, the correct answer is C) $5.10.

LTI Corppurchased 500 Shares as a Short-Term Investment for $5,100 on on January