At January 1, 2017, Calypso Ltd had 600,000 common shares outstanding (no preferred shares issued).During 2017, Calypso issued 84,000 shares on May 1, purchased 42,000 treasury shares on September 1, and issued 36,000 more shares on November 1.The weighted average of common shares outstanding for 2017 is

Question

Quizplus · Accepted Answer

To calculate the weighted average of common shares outstanding, we need to take into account the number of shares outstanding during each period of the year.

- From January 1 to April 30 (121 days): 600,000 shares
- From May 1 to August 31 (123 days): 684,000 shares ((600,000 x 121) + (684,000 x 123))/244 = 642,000
- From September 1 to October 31 (61 days): 642,000 shares ((600,000 x 121) + (684,000 x 123) - (42,000 x 61))/183 = 648,000
- From November 1 to December 31 (61 days): 684,000 shares ((600,000 x 121) + (684,000 x 123) - (42,000 x 61) + (36,000 x 61))/244 = 662,000

The weighted average of common shares outstanding is (121/366 x 600,000) + (123/366 x 684,000) + (61/366 x 648,000) + (61/366 x 684,000) = 648,000. Therefore, the best choice is B.

At January 1, 2017, Calypso Ltd Had 600,000 Common Shares