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On January 1, 2018, Warren Corporation had 1,000,000 shares of common stock outstanding. On March 1,...

On January 1, 2018, Warren Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 160,000 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 520,000 of its own outstanding shares and retired them. Compute the weighted average number of shares to be used in computing earnings per share for 2018. Weighted average number of shares

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Expert Solution

Increase / Decrease

Shares Outstanding

Months outstanding

Share months

Jan-01

                                       -

                          1,000,000

2

1,000,000*2/1*2 = 4,000,000

Mar-01

                         160,000

                      1,160,000

4

1,160,000*2/1*4 = 9,280,000

Jul-01

                     1,160,000

                      2,320,000

3

2,320,000*3 = 6,960,000

Oct-01

                           (520,000)

                      1,800,000

3

1,800,000*3 = 5,400,000

12

25,640,000

Weighted average number of shares = 25,640,000 / 12 = 2,136,667 (app.)

ekkarill92 answered 1 year ago
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