Question & Answer: Weighted-Average Number of Share Question…..

Weighted-Average Number of Share Question

Assuming XYZ uses a calendar year for financial reporting. The company is authorized to issue 37,500,000 shares of $1 par common stock. Listed below is a summary of XYZ’s common stock activities.
1. Number of common shares issued and outstanding at December 31, 2014 3,000,000
2. Shares issued as a result of a 40% stock dividend on August 1, 2015 1,200,000
3. Shares issued for cash on May 31, 2016 1,875,000
Number of common shares issued and outstanding at December 31, 2016 6,075,000
4. A 3‐for‐1 stock split of XYZ’s common stock took place on July 31, 2017
(a) Compute the weighted average number of common shares used in computing earnings per common share for 2015 on the 2016 comparative income statement.

(b) Compute the weighted average number of common shares used in computing earnings per common share for 2016 on the 2016 comparative income statement.

(c) Compute the weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2017 comparative income statement.

(d) Compute the weighted average number of common shares to be used in computing earnings per common share for 2017 on the 2017 comparative income statement.