Question

Tomba Corporation had 300,000 shares of common stock outstanding on January 1, 2017. On May 1, Tomba issued 30,000 shares.(a) Compute the weighted-average number of shares outstanding if the 30,000 shares were issued for cash.

Answer 1

Answer:

320,000

Explanation:

Given that,

Common stock outstanding on January 1, 2017 = 300,000 shares

On May 1, shares issued = 30,000

Weighted average shares :

= [300,000 × (12 ÷ 12)] + [30,000 × (8 ÷ 12) ]

= 300,000 + 20,000

= 320,000

Therefore, the weighted-average number of shares outstanding is 320,000 if the 30,000 shares were issued for cash.

Note:

As they issued stock dividend additional shares assumed to be outstanding from the very beginning of the year.