Question

On January 1, 2018, Warren Corporation had 950,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 450,000 of its own outstanding shares and retired them.
Required:
Compute the weighted average number of shares to be used in computing earnings per share for 2018.

Answer 1

Answer:

1,670,833.33 stocks

Explanation:

date             stock inc./dec.      total stocks        months       stocks

Jan. 1                     0                   950,000            2 x 2           3,800,000

March 1            150,000             1,100,000          4 x 2            4,400,000

July 1              1,100,000            2,200,000            3              6,600,000

October 1       -450,000             1,750,000            3               5,250,000

total                                                                                        20,050,000

weighted average stocks = 20,050,000 / 12 months = 1,670,833.33