Question

1. On 1/1/10, ABC had 2,600 shares outstanding. On 2/1/10, options were exercised which resulted in an additional 400 shares being issued. On 5/1/10, there was a 10% stock dividend. On 9/1/10, ABC issued 1,200 additional shares. On 11/1/10, ABC purchased 400 shares of treasury stock. On 12/1/10, ABC had a 3-for-1 stock split. How many weighted shares did ABC have outstanding at 12/31/10?

   		10,790 shares
   		10,800 shares
   		10,810 shares
   		10,820 shares

2. On 1/1/10, ABC had 2,600 shares outstanding. On 2/1/10, options were exercised which resulted in an additional 400 shares being issued. On 5/1/10, there was a 10% stock dividend. On 9/1/10, ABC issued 1,200 additional shares. On 11/1/10, ABC purchased 400 shares of treasury stock. On 12/1/10, ABC had a 3-for-1 stock split. How many shares did ABC have outstanding at 12/31/10?

   		12,100 shares
   		12,200 shares
   		12,300 shares
   		12,400 shares

3. ABC has 5,000 options outstanding. Each option gives the option holder the option to buy one share of stock at $8 per share. Assume the market price per share of stock is $10. To calculate diluted EPS, ABC uses the treasury stock method. For the above scenario, how many shares would increase for ABC when calculating diluted EPS? In other words, how much would the denominator of the EPS equation increase?

   		500 shares
   		1,000 shares
   		1,500 shares
   		2,000 shares

Answer 1

Answers:-

1. 10790 shares

2. 12300 shares

3. 1000 shares

Computation:-

(C) Date 1/1/10 2/1/10 5/1/10 9/1/10 11/1/10 12/1/10 Calculation of Weighted Average number of shares Outstanding (A) (B) Shares Share Transaction Share Changes Restated Fraction Year Outstanding Beg. Balance 2600 2600 1.1*3 1/12 Shares Issued +400 3000 1.1*3 3/12 10% Stock Dividend +300 (3000*10%) 3300 4/12 Additional shares issued +1200 4500 3 2/12 Treasury Stock (400) 4100 1/12 3 for 1 stock split =4100*3 12300 1/12 Weighted Shares (A*B*C) Weighted Shares 715 2475 3300 2250 1025 1025 10790 Share Outstansing on 12/31/10 =( 2600+400+300+1200-400)*3= 12300

Outstanding Shoes - 5000 option Price a $8 per share Marker Pricez $ 10 per share % 2 4m cellula 10-8 x100 z 20% 10 5000 x 20% 2 1000 Shares Denominator 2 4 0ლავ

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