On January 1, 2009, Carleton Corporation had 55,000 shares of $6 par value ordinary share outstanding. On March 31, 2009, Carleton issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of basic earnings per share for the year 2009?

Question

Quizplus · Accepted Answer

The number of shares used in the computation of basic earnings per share for the year 2009 will be the weighted average of the number of shares outstanding during the year.

Weighted Average Number of Shares = [(Number of Shares Outstanding at the Beginning of the Year x Number of Months) + (Number of Shares Outstanding at the End of the Year x Number of Months)] / 12

Number of shares outstanding at the beginning of the year = 55,000 
Number of shares outstanding at the end of the year = 65,000 (55,000 + 10,000) 
Number of months outstanding = 12

Weighted Average Number of Shares = [(55,000 x 3) + (65,000 x 9)] / 12 = 62,500

Therefore, the answer is C) 62,500.

On January 1, 2009, Carleton Corporation Had 55,000 Shares of $6