Question

On January 1, 2020, Gridley Corporation had 187,500 shares of its $2 par value common stock outstanding. On March 1, Gridley sold an additional 375,000 shares on the open market at $20 per share. Gridley issued a 20% stock dividend on May 1. On August 1, Gridley purchased 210,000 shares and immediately retired the stock. On November 1, 300,000 shares were sold for $25 per share. What is the total weighted-average number of shares outstanding for 2020? (5 points)

Dates	Shares	Fraction of Year	Restatement	Weighted Shares

Answer 1

Answer 2

To calculate the total weighted-average number of shares outstanding for 2020, we need to determine the weighted number of shares for each period and then sum them up. Let's break down the calculations step by step:

1. On January 1, 2020: Shares Outstanding = 187,500

2. On March 1, 2020: Gridley sold 375,000 shares on the open market at $20 per share, so new shares issued = 375,000. Total Shares Outstanding = 187,500 (previous) + 375,000 (new) = 562,500

   Fraction of Year = (31 days) / (365 days) = 31/365

   Weighted Shares = 562,500 * (31/365)

3. On May 1, 2020: Gridley issued a 20% stock dividend, which means 20% of the total shares outstanding were distributed as new shares. New Shares Issued = 562,500 * 0.20 = 112,500 Total Shares Outstanding = 562,500 (previous) + 112,500 (new) = 675,000

   Fraction of Year = (61 days) / (365 days) = 61/365

   Weighted Shares = 675,000 * (61/365)

4. On August 1, 2020: Gridley purchased 210,000 shares and retired them immediately. So, the shares are no longer outstanding. Total Shares Outstanding = 675,000 (previous) - 210,000 (retired) = 465,000

   Fraction of Year = (213 days) / (365 days) = 213/365

   Weighted Shares = 465,000 * (213/365)

5. On November 1, 2020: Gridley sold 300,000 shares for $25 per share. New Shares Issued = 300,000 Total Shares Outstanding = 465,000 (previous) + 300,000 (new) = 765,000

   Fraction of Year = (335 days) / (365 days) = 335/365

   Weighted Shares = 765,000 * (335/365)

Now, sum up all the weighted shares for each period:

Total Weighted-Average Number of Shares Outstanding for 2020 = Weighted Shares (March) + Weighted Shares (May) + Weighted Shares (August) + Weighted Shares (November)

Total Weighted-Average Number of Shares Outstanding for 2020 = (562,500 * (31/365)) + (675,000 * (61/365)) + (465,000 * (213/365)) + (765,000 * (335/365))

Calculate the above expression to get the final result for the total weighted-average number of shares outstanding for 2020.