Choice "D" is correct. The weighted average number of shares outstanding is computed by applying the ratio of the period the shares are outstanding to the total shares in each transaction for sales and repurchases. Stock splits are handled as if they had occurred at the beginning of the year. The weighted average is computed as follows:

Choice "b" is incorrect. This answer fails to incorporate the impact of the stock split and treats the sale of shares on January 1, Year 2 and the repurchase of shares on June 23, Year 2 as if they had occurred on July 1, Year 1. Stock sales and repurchases are not adjusted retroactively.
Choice "c" is incorrect. This answer incorrectly treats the share repurchase as if it had occurred on July 1, Year 1. Stock repurchases must be time weighted for the period of the year that the shares were held by the corporation. Stock repurchases do not require retroactive adjustment.
Choice "a" is incorrect. The stock sale and stock repurchase must be time weighted and should not be treated as if they occurred at the beginning of the period.