Question

In: Accounting

Amandeep started the year with 500,000 shares of common stock outstanding. On April 1, she issued...

Amandeep started the year with 500,000 shares of common stock outstanding. On April 1, she issued 200,000 shares. On July 15, she had a 2:1 stock split. On November, she purchased back 100,000 shares (treasury stock).

What is the weighted number of share Amandeep has outstanding? _______________

Solutions

Expert Solution

Weightage Number of Shares
(Accounting Year January XXXX to December XXXX)
Date Particulars No. of Shares Issued (A) No. of Shares Bought back No. of Shares Outstanding No. of Months Upto December XXXX (B) Total No of Shares (A X B)
1-Jan Balance Beginning of the year 500000                         -   500000 12 6000000
1-Apr Issue of Shares 200000                         -   700000 9 1800000
15-Jul Stock Spilit (2:1)* 1400000                         -   2100000 5.5 7700000
1-Nov Buyback of Shares                -   100000 2000000 2 -200000
15300000
*Number of Shares Outstanding before the event of Stock Spilit, should be consider for Newly shares issued against of Stock spilit.i.e.2:1
The weighted average number of shares
= Total Number of Shares
12
15300000
12
= 1275000 Shares
Alternatively,
The weighted average number of shares
= (500000X3/12)+ (700000X3.5/12)+(2100000x3.5/12) + (2000000 x 2/12)
= 1275000 Shares


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