Question

A company had 700,000 shares of common stock outstanding on January 1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock on September 1, and issued 54,000 shares on November 1. The weighted average shares outstanding for the year is

a. 751,000
b. 814,000
c. 772,000
d. 793,000
e. none of these answers are correct

Answer 1

The weighted average shares outstanding for the year is 814,000

Solution:

Company had 700,000 shares

126,000 shares on May 1

1.
`(126,000 * 8)/(12)` = 84000

63,000 shares of treasury stock

2.
`(63,000 * 4)/(12)` = 21000

54,000 shares on November 1

3.
`(54,000 * 2)/(12)` = 9000

Now add all the shares = 700,000 + 84,000 + 21,000 + 9000

= 814000

The weighted average shares outstanding for the year is 814,000