Answer:
The correct answer is 137,500 Shares.
Explanation:
According to the scenario, the computation of the given data are as follows:
Time period Jan.1 - Jul.1 = 6 months
So, first we calculate the weighted average before dividend.
Weighted average before dividend shares outstanding = (100,000 × 6 ÷ 12) + (120,000 × 6 ÷ 12)
= 50,000 + 60,000 = 110,000
Now we can calculate the weighted-average number of common shares outstanding during Year 2 by using following formula:
Weighted-average number of common shares outstanding = Weighted average before dividend shares outstanding + Dividend on outstanding Shares
By putting the value we get,
= 110,000 + 25% × 110,000
= 110,000 + 27,500
= 137,500 Shares
