Question

On January 1, 2018, Gridley Corporation had 375.000 shares of its $2 par value common stock outstanding. On March 1, Gridley sold an additional 750.000 shares on the open market at $20 per share. Gridley issued a 20% stock dividend on May 1. On August 1, Gridley purchased 420.000 shares and immediately retired the stock. On November 1, 600.000 shares were sold for $25 per share. What is the weighted-average number of shares outstanding for 2018? 1, 530,000 1, 125,000 7, 16, 665 516, 666

Answer 1

weighted-average shares outstanding: 1,075,000

Step-by-step explanation:

We need to multiply by the shares movements by the months remaining to complete the year. Thus, assinging a weight to each share.

Jan 1st: 375,000 x 12/12(all year) = 375,000

March 1st: 750,000 x 10/12(from March 1st to Dec 31th) = 625,000

May 1st: 20% stock dividends: (375,000 + 750,000) x 20% x 8/12 =

225,000 x 8/12(May 1st to Dec 31th) = 150,000

August 1st: (420,000) x 5/12(August 1st to Dec 31th) = (175,000)

November 1st: 600,000 x 2/12(November 1st to Dec 31th) = 100,000

375,000 + 562,500 + 150,000 - 175,000 + 100,000 = 1,075,000