The January 1 balance is adjusted retroactively for the stock dividend and (540,000 × 1.5) = 810,000 shares are treated as outstanding from January 1. The weighted average number of shares is computed by multiplying the shares by the number of months held, as follows:
|
January 1 |
Initial shares |
(810,000 × 12) = |
9,720,000 |
|
July 1 |
Reacquired shares |
(-180,000 × 6) = |
1,080,000 |
|
October 1 |
Reissued shares |
(60,000 × 3) = |
180,000 |
|
|
|
|
8,820,000 |
Weighted average shares was (8,820,000 / 12) = 735,000 shares.
|
