Question

On January 1, 2018, Sheridan Company had 387000 shares of its $2 par value common stock...

On January 1, 2018, Sheridan Company had 387000 shares of its $2 par value common stock outstanding. On March 1, Sheridan sold an additional 758000 shares on the open market at $20 per share. Sheridan issued a 20% stock dividend on May 1. On August 1, Sheridan purchased 426000 shares and immediately retired the stock. On November 1, 606000 shares were sold for $25 per share. What is the weighted-average number of shares outstanding for 2018? (Rounded to the nearest dollar.)

529979

1145900

1554000

729979

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Answer #1

Stock Dividends, Stock Splits or Stock Subscriptions (retroactively adjusted) - Shares are treated as if they had always been outstanding and included at full amount for current year.

January 1, 2018 Shares outstanding 387,000 (387,000*12/12)
March 1 Shares sold 631,667 (758,000*10/12)
May 1 Stock dividend 203,733 [(387,000+631,667)*20%]
August 1 Less : Shares purchased 177,500 (426,000*5/12)
November 1 Shares sold 101,000 (606,000*2/12)

The weighted-average number of shares outstanding for 2018 = 387,000 + 631,667 + 203,733 - 177,500 + 101,000 = 1,145,900

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