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On January 1st, 2020, Baker Pump Corporation had 100,000 shares of common stock outstanding. On March 1st the corporation issued 50,000 additional common shares to raise cash. On July 1st, the corporation declared and issued a 4% stock dividend. On October 1st, the corporation purchased on the market 3,000 shares of its own outstanding stock. On November 30th, the corporation issued a 3:1 stock split.
InstructionsCompute the weighted average number of shares to be used in computing earnings per share for 2020.

Answer :

Answer:

The weighted average number of shares to be used in computing earnings per share for 2020 is 439,750 shares.

Explanation:

Note: See the attached excel file for the computation of the weighted average number of shares.

The weighted average number of shares refers to the sum of the each portion of the multiplication of the number of outstanding shares and the portion of the reporting period covered by those shares.

Note: All the formulae used in calculating each element of the weighted average number of shares are shown in the attached excel file. Kindly take note.

From the attached excel file (see the bold red color), the weighted average number of shares to be used in computing earnings per share for 2020 is 439,750 shares.

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