XYZ Ltd has 10 000 ordinary shares on issue at 1 July 2015 which is the beginning of its reporting period. On 1 May 2016, it issued a further 2000 ordinary shares for cash. The weighted average number of shares for use in the earnings per share calculation is:
A) 10 000 shares
B) 10 333 shares
C) 11 000 shares
D) 12 000 shares

Question

Quizplus · Accepted Answer

To calculate the weighted average number of shares, we need to consider the number of shares outstanding for each part of the reporting period.

Number of shares outstanding for the first 10 months (July 2015 to April 2016) = 10,000
Number of shares outstanding for the last 2 months (May 2016 to June 2016) = 12,000 (2000 shares issued on 1 May 2016)

Weighted average number of shares = [(10,000 x 10) + (12,000 x 2)] / 12 = 10,333.33

Therefore, the best choice is B.

XYZ Ltd Has 10 000 Ordinary Shares on Issue at 1