Question

On January 1, 20X7, Yarrow Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 600,000 of its own outstanding shares and retired them.

Compute the weighted average number of shares to be used in computing earnings per share for 2021.

Increase Months
(Decrease) Outstanding Outstanding Share Months

Answer 1

Yarrow Corporation

The weighted average number of shares to be used in computing earnings per share for 2021 is:

= 2,125,000 shares.

Step-by-step explanation:

a) Data and Calculations:

Weighted-Average Number of Shares

Date Outstanding Shares Weight Weighted Average

January 1, 1,000,000 12/12 1,000,000

March 1 Issue 150,000 10/12 125,000

July 1 2-for-1 2,300,000 6/12 1,150,000

October 1 Treasury (600,000) 3/12 (150,000)

Total number 2,850,000 2,125,000