Question

Crane Company had 790000 shares of common stock outstanding on January 1, issued 121000 shares on May 1, purchased 60000 shares of treasury stock on September 1, and issued 50000 shares on November 1.
(a) The weighted average shares outstanding for the year is ______________.

Answer 1

Answer:

The weighted average number of shares for the year based on the below computation is 859,000 shares

Explanation:

The analysis of weighted average of number of shares for Crane company is computed below laying particular emphasis on the time of the share transactions:

Dates                  shares                     weight               weighted average

Jan-Dec            790,000                     12/12                       790,000

May-Dec              121,000                 8/12                              80,666.67  

Sep-Dec               (60,000)                4/12                              (20,000)

Nov-Dec                50,000                 2/12                              8,333.33  

   total weighted average number of shares                      859,000

This is number of shares that are entitled to earnings during the year that is the number of shares applicable to earnings per share

Answer 2

Answer:

The weighted average shares outstanding for the year is 859,000.

Explanation:

Jan.1: outstanding shares 790,000: (790,000 x 12)  = 9,480,000

May.1: Issued additional 121,000 shares: (121,000 x 8) =968,000

Sep.1: Purchase 60,000 shares of T.S: (60,000 x 4)  = (240,000)

Nov.1: Issued additional 50,000 shares: (50,000 x 2)  =100,000

                                                                                   =  10,308,000

Note: We take the number of months from the transaction date to the months remaining in the year end.

Weighted Average Outstanding Shares =  10,308,000

                                                                              12

Weighted Average Outstanding Shares = 859,000