Question

On January 1, 2020, Pharoah Manufacturers had 258,000 common shares outstanding. On April 1, the corporation...

On January 1, 2020, Pharoah Manufacturers had 258,000 common shares outstanding. On April 1, the corporation issued 25,800 new common shares to raise additional capital. On July 1, the corporation declared and distributed a 10% stock dividend on its common shares. On November 1, the corporation repurchased on the market 12,000 of its own outstanding common shares to make them available for issuances related to its key executives’ outstanding stock options.

QUESTIONS:

A) Calculate the weighted average number of shares outstanding as at December 31, 2020.

B) Assume that Pharoah Manufacturers had a 1-for-10 reverse stock split instead of a 10% stock dividend on July 1, 2020.

Calculate the weighted average number of shares outstanding as at December 31, 2020.

Business   Accounting   
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Answer #1

a.

Months share outstanding Actual share outstanding No. of month outstanding Equivalents units
Jan - March 258000 1.1 3 70950
April-June 283800 1.1 3 78045
July-October 312180 4 104060
Nov - December 300180 2 50030
weighted average number of shares outstanding as at December 31, 2020 303085

b.

Months share outstanding Actual share outstanding No. of month outstanding Equivalents units
Jan - March 258000 0.1 3 6450
April-June 283800 0.1 3 7095
July-October 28380 4 9460
Nov - December 16380 2 2730
weighted average number of shares outstanding as at December 31, 2020 25735
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