Final answer:
The weighted average shares of stock outstanding for RHYME Company in 2017 is 35,833.33. This figure accounts for a 3 for 2 stock split, the issuance of new shares, and the retirement of some shares throughout the year.
Step-by-step explanation:
To calculate the weighted average shares of stock outstanding for 2017 for RHYME Company, we need to take account of the stock split and the shares issued and retired during the year. Initially, there were 20,000 shares outstanding. After the 3 for 2 stock split, each shareholder receives an additional half share for each share they own, increasing the number of shares to 30,000. This split occurs on February 27, so it applies to the remainder of the year.
Then, on April 1, an additional 12,000 shares are issued, bringing the total to 42,000 shares outstanding. These shares are outstanding for 9 months (April through December). On October 1, 6,000 shares are retired, which leaves 36,000 shares for the remaining 3 months of the year.
Now, we can calculate the weighted average:
- 20,000 shares for 2 months (January and February): 20,000 shares x 2/12 = 3,333.33
- 30,000 shares for 1 month (March): 30,000 shares x 1/12 = 2,500.00
- 42,000 shares for 6 months (April to September): 42,000 shares x 6/12 = 21,000.00
- 36,000 shares for 3 months (October to December): 36,000 shares x 3/12 = 9,000.00
Adding these amounts gives us the weighted average shares for 2017: 3,333.33 + 2,500.00 + 21,000.00 + 9,000.00 = 35,833.33 shares.