Question

On January 1, 2021, Warren Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 200,000 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 600,000 of its own outstanding shares and retired them. Compute the weighted average number of shares to be used in computing earnings per share for 2021.

Answer 1

Answer:

1,616,667

Explanation:

January-February 28          1,000,000*2/12=166,667

March-June 30                   1,200,000*4/12= 400,000

July-September 30            1,200,000*2*3/12=600,000

October-December 31     (2,400,000-600,000)*3/12=450,000

Weighted Average Shares for EPS for 2021=1,616,667