MMM Inc.had 5,000 shares outstanding on January 1,2010.MMM Inc.issued 8,000 shares on May 1 and an additional 9,000 shares on August 1,2010.How many shares will be used to calculated earnings per share (2010).

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Quizplus · Accepted Answer

To calculate the weighted average number of shares for earnings per share, you account for the time each share amount was outstanding during the year. From January 1 to April 30 (4 months), there were 5,000 shares. From May 1 to July 31 (3 months), there were 13,000 shares (5,000 original + 8,000 issued). From August 1 to December 31 (5 months), there were 22,000 shares (13,000 + 9,000 issued). The weighted average is calculated as follows: (5,000 shares * 4/12) + (13,000 shares * 3/12) + (22,000 shares * 5/12) = 14,083 shares.

MMM IncHad 5,000 Shares Outstanding on January 1,2010