Question

Compute Weighted-Average Number of shares outstanding: Bee-Boy Honey Products began the current year with 70,000 common shares outstanding. The firm issued additional shares of 8,500 on June 1. On August 31 Bee-Boy implemented a 3 for 1 stock split. On September 1 the company issued another 15,000 shares. On December 1 the company purchased 600 shares of treasury stock. The firm’s year-end is December 31.

Answer 1

To calculate Bee-Boy Honey Products' weighted-average number of shares outstanding, you must consider the shares before and after each transaction, adjusted for the portion of the year completed, then sum these weighted shares.

Step-by-step explanation:

To compute the weighted-average number of shares outstanding for Bee-Boy Honey Products, we must account for the timing of share transactions throughout the year:

• Start with 70,000 shares
  
• Issue 8,500 shares on June 1
  
• A 3 for 1 stock split on August 31, tripling the share count
  
• Issue 15,000 new shares post-split on September 1
  
• Purchase 600 treasury shares on December 1
  

Shares are weighted based on the fraction of the year they were outstanding:

1. 70,000 shares for 5/12 of the year, before the June 1 issuance
   
2. 78,500 shares for 3/12 of the year, before the stock split
   
3. (78,500 * 3) = 235,500 shares for 1/12 of the year, after the stock split but before the September issuance
   
4. (235,500 + 15,000) = 250,500 shares for 3/12 of the year, after the September issuance but before the purchase of treasury stock
   
5. (250,500 - 600) = 249,900 shares for 1/12 of the year, after the purchase of treasury stock
   

Finally, we sum the weighted shares:

(70,000 * 5/12) + (78,500 * 3/12) + (235,500 * 1/12) + (250,500 * 3/12) + (249,900 * 1/12) = Weighted-Average Number of Shares Outstanding