Final answer:
The weighted average shares outstanding for Milo Co. is calculated by considering the time each share count was effective throughout the year, leading to a total of 672,000 weighted average shares.
Step-by-step explanation:
The student is asking about calculating the weighted average shares outstanding during a year with multiple stock transactions. To determine this, we examine each change in the number of shares and the portion of the year each share count is in effect. Milo Co. starts with 600,000 shares, issues 126,000 on May 1 (for 8/12 of the year), purchases 63,000 treasury shares on September 1 (for 4/12 of the year), and issues 54,000 shares on November 1 (for 2/12 of the year).
- From January 1 to May 1: 600,000 shares x 4/12 months = 200,000 weighted shares
- From May 1 to September 1: (600,000 + 126,000) shares x 4/12 months = 242,000 weighted shares
- From September 1 to November 1: (726,000 - 63,000) shares x 2/12 months = 110,500 weighted shares
- From November 1 to December 31: (663,000 + 54,000) shares x 2/12 months = 119,500 weighted shares
Adding these up gives us 200,000 + 242,000 + 110,500 + 119,500 = 672,000 weighted average shares outstanding.
Therefore, the correct answer is b. 672,000.