in 2011 hardin company had 220000 shares $10 par common stock, march 1 issued 45000 shares at $22, June 1 issued 15% stack dividend, July 1 issued 10000 at $27, Aug 31 2-for-1 stock split reduce par $5, determine the weighted average number of shares based on the transactions
To determine the weighted average number of shares based on the transactions, we need to calculate the weighted average number of shares for each period and then find their sum. Let's break down the calculation step by step:
1. Begin with the initial number of shares:
- In 2011, Hardin Company had 220,000 shares of $10 par common stock.
2. March 1: Issued 45,000 shares at $22 each.
- This transaction increases the number of shares by 45,000.
3. June 1: Issued a 15% stock dividend.
- A stock dividend increases the number of shares by a percentage. So, find 15% of the initial number of shares:
15% of 220,000 = 0.15 * 220,000 = 33,000 shares.
- Add the calculated shares to the total number of shares.
4. July 1: Issued 10,000 shares at $27 each.
- This transaction increases the number of shares by 10,000.
5. August 31: 2-for-1 stock split, reducing the par value to $5.
- A stock split doubles the number of shares. So, multiply the total number of shares by 2:
2 * (Total number of shares after all previous transactions) = New total number of shares.
- After the stock split, the par value is reduced to $5, but that does not affect the number of shares.
6. Calculate the weighted average number of shares based on the transactions:
- Assign weights to each period based on the number of days.
- For example, if January had 31 days and the transactions took place on March 1, June 1, July 1, and August 31, calculate the number of days between January 1 and each transaction date.
- Calculate the weighted average number of shares for each period by multiplying the number of shares in that period by the weight assigned to it (number of days divided by the total number of days in the period).
- Repeat this calculation for each period.
- Sum up all the weighted average shares calculated for each period to get the final weighted average number of shares.
Note: The specific number of days in each period and the total number of days in the year are needed to calculate the weighted average number of shares accurately.