At January 1, 2020, Dango Ltd had 450,000 common shares outstanding (no preferred shares issued). During 2020, Dango issued 60,000 shares on May 1, purchased 36,000 treasury shares on September 1, and issued 42,000 more shares on November 1. The weighted average of common shares outstanding for 2020 is

Question

Quizplus · Accepted Answer

To calculate weighted average of common shares outstanding, we need to take into account the number of shares outstanding during each period and the duration for which they were outstanding.

- For the period from January 1 to April 30, 2020: 450,000 shares were outstanding for 4 months, so the weighted average is 450,000 x 4/12 = 150,000.
- For the period from May 1 to August 31, 2020: 510,000 shares were outstanding for 4 months, so the weighted average is 510,000 x 4/12 = 170,000.
- For the period from September 1 to October 31, 2020: 474,000 shares were outstanding for 2 months (after deducting 36,000 treasury shares), so the weighted average is 474,000 x 2/12 = 79,000.
- For the period from November 1 to December 31, 2020: 516,000 shares were outstanding for 2 months, so the weighted average is 516,000 x 2/12 = 86,000.

Adding up the weighted averages for each period gives us a total of 485,000. Therefore, choice B is the correct answer.

At January 1, 2020, Dango Ltd Had 450,000 Common Shares