Weighted Average Shares-At the beginning of the current year, Hardin Company had

Question

Weighted Average Shares-At the beginning of the current year, Hardin Company had 20,000 shares of $10 per common stock outstanding. During the year, it engaged in the following transactions related to its common stock, so that at year end it had 63,800 shares outstanding: April 1 Issued 5,000 shares of stock. June 1, Issued 4,000 shares of stock July 1, Issued a 10% stock dividend Sept 30, Issued a 2-for-1 stock split, reducing the par value to $5 per share. Oct. 1 Reacquired 1,000 shares as treasury stock Nov 30, Reissued the 1,000 shares of treasury stock. REQUIRED: Determine the weighted average number of shares outstanding for computing the current earnings per share.

Explanation / Answer

Calculation of Weighted Average Number of Shares Outstanding

No of Shares Outstanding at the beginning of year (20,000 x 12/12).................................20,000 shares

Add: 01 April Issues 5,000 shares (5,000 x 9/12)...............................................................3,750 shares

Add: 01 June Issues 4,000 shares (4,000 x 7/12)...............................................................2,334 shares

Add: 01 July Issued 10% stock dividend (20,000 + 5,000 + 4,000) x 10% x (12/12)..........2,900 shares

Add: 30 Sep Issued 2-for-1 stock split (20,000 + 5,000 + 4,000 + 2,900) x 2 x (12/12)......31,900 shares

Less: 1 Oct. Reaquire 1,000 shares (1,000 x 3/12)............................................................(250 shares)

Add: 30 Nov. Reissued 1,000 shares (1,000 x 1/12)...........................................................84 shares

Balance Weighted Average Number of shares outstanding..........................................60,718 shares

Note: Shares are rounded off to upper number i.e. 2,333.33 shares rounded off to 2,334 and 83.33 shares rounded off to 84 shares

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