A is corrent. The requirement is to compute the weighted-average number of shares outstanding. This answer is correct because the weighted-average shares outstanding is calculated as follows:| Shares outstanding at 1/1 | 100,000 shares × 12/12 | 100,000 | | Stock dividend at 3/31 | 24,000 shares × 12/12 | 24,000 | | Stock issued on 6/30 | 5,000 shares × 6/12 | 2,500 | | Total weighted-average common shares outstanding | | 126,500 |
NOTE: The stock dividend is treated as if the shares were outstanding for the entire year. The stock issued during the year is weighted by the number of months outstanding.B is incorrect. Weighted-average shares outstanding is calculated as follows:| Shares outstanding at 1/1 | 100,000 shares × 12/12 | 100,000 | | Stock dividend at 3/31 | 24,000 shares × 12/12 | 24,000 | | Stock issued on 6/30 | 5,000 shares × 6/12 | 2,500 | | Total weighted-average common shares outstanding | | 126,500 |
NOTE: The stock dividend is treated as if the shares were outstanding for the entire year. The stock issued during the year is weighted by the number of months outstanding. C is incorrect. Weighted-average shares outstanding is calculated as follows:| Shares outstanding at 1/1 | 100,000 shares × 12/12 | 100,000 | | Stock dividend at 3/31 | 24,000 shares × 12/12 | 24,000 | | Stock issued on 6/30 | 5,000 shares × 6/12 | 2,500 | | Total weighted-average common shares outstanding | | 126,500 |
NOTE: The stock dividend is treated as if the shares were outstanding for the entire year. The stock issued during the year is weighted by the number of months outstanding. D is incorrect. Weighted-average shares outstanding is calculated as follows:| Shares outstanding at 1/1 | 100,000 shares × 12/12 | 100,000 | | Stock dividend at 3/31 | 24,000 shares × 12/12 | 24,000 | | Stock issued on 6/30 | 5,000 shares × 6/12 | 2,500 | | Total weighted-average common shares outstanding | | 126,500 |
NOTE: The stock dividend is treated as if the shares were outstanding for the entire year. The stock issued during the year is weighted by the number of months outstanding. |
