Question

The following information pertains to Ceil Co., a company whose common stock trades in a public market: Shares outstanding at 1/1 100,000 Stock dividend at 3/31 24,000 Stock issuance at 6/30 5,000 What is the weighted-average number of shares Ceil should use to calculate its basic earnings per share for the year ended December 31?

a. 129,000
b. 120,500
c. 126,500
d. 123,000

Answer 1

c. 126,500

Step-by-step explanation:

The computation of the weighted-average number of shares is shown below:

= Shares outstanding + Stock dividend + Stock issuance

= $100,000 + $24,000 + $2,500

= $126,500

The stock issuance would be

= $5,000 × 6 months ÷ 12 months

= $2,500

The 6 months is calculated from January 1 to June 30

The stock dividend is to be outstanding at the beginning year i.e January 1