Hello,

I am working on some Accounting homework and I am completely stuck. This is the problem

Outstanding shares of December 31, 2003 52,800
Issuance of new shares on July 1 +16,000
Treasury stock purchase on November 1 - 4,800
Outstanding shares on December 31, 2004

1. Compute the weighted average of the common shares outstanding for year 2004.

Can anyone explain this to me

NB : I may be wrong.
Am Not An expert.

What is Weighted Average in such case?

However, WHAT could be the reason for finding weighted average of the common shares outstanding?

Perhaps to calculate dividends.

In that case, New shares were held for only half the year.

So weighted average may be: 52,800 + 1/2 times 16,000.

= 52800 + 8000 = 60800 shares.

Quote:

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Originally Posted by Chut

Hello,

I am working on some Accounting homework and I am completely stuck. This is the problem

Outstanding shares of December 31, 2003 52,800
Issuance of new shares on July 1 +16,000
Treasury stock purchase on November 1 - 4,800
Outstanding shares on December 31, 2004

1. Compute the weighted average of the common shares outstanding for year 2004.

Can anyone explain this to me

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6 months at 52,800
4 months at 68,800
2 months at 64,000

weighted average = (6*52.8+4*68.8+2*64)/12= 60,000