Question

Crane Company had 790000 shares of common stock outstanding on January 1, issued 121000 shares on May 1, purchased 60000 shares of treasury stock on September 1, and issued 50000 shares on November 1.

(a) The weighted average shares outstanding for the year is ______________.

Answer 1

The weighted average number of shares for the year based on the below computation is 859,000 shares

Step-by-step explanation:

The analysis of weighted average of number of shares for Crane company is computed below laying particular emphasis on the time of the share transactions:

Dates shares weight weighted average

Jan-Dec 790,000 12/12 790,000

May-Dec 121,000 8/12 80,666.67

Sep-Dec (60,000) 4/12 (20,000)

Nov-Dec 50,000 2/12 8,333.33

total weighted average number of shares 859,000

This is number of shares that are entitled to earnings during the year that is the number of shares applicable to earnings per share

Answer 2

The weighted average shares outstanding for the year is 859,000.

Step-by-step explanation:

Jan.1: outstanding shares 790,000: (790,000 x 12) = 9,480,000

May.1: Issued additional 121,000 shares: (121,000 x 8) =968,000

Sep.1: Purchase 60,000 shares of T.S: (60,000 x 4) = (240,000)

Nov.1: Issued additional 50,000 shares: (50,000 x 2) =100,000

= 10,308,000

Note: We take the number of months from the transaction date to the months remaining in the year end.

Weighted Average Outstanding Shares = 10,308,000

12

Weighted Average Outstanding Shares = 859,000