Question

On January 1, 2020, ABC Corporation had 990,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On May 1, the company issued a 5% stock dividend. On July 1, the corporation declared and issued a 3-for-1 stock split. On October 1, the corporation repurchased on the market 400,000 of its own outstanding shares and retired them.
Instructions:
Compute the weighted average number of shares to be used in computing earnings per share for 2020.

Answer 1

Answer:

ABC Corporation

The weighted-average number of common stock shares to be used in computing the earnings per share for 2020 is:

= 1,452,500.

Explanation:

a) Data and Calculations:

The Weighted-average number of shares to be used in computing earnings per share for 2020:

2020                   Description                            Number    Weight   Result

January 1,   Outstanding common stock         990,000   12/12     990,000

March 1,      New issue of common stock         150,000    10/12     125,000

May 1,         5% Stock dividend (1,140,000 *5%) 57,000      8/12      38,000

July 1,         3-for-1 stock split (1,197,000/3)      399,000     6/12     199,500

October 1,  Treasury stock                              (400,000)     3/12    100,000

Weighted-average number of common stock shares                1,452,500