[Anonymous]

I’m having some trouble having a comfortable grasp on calculating WASCO. Mostly because in the Becker book they use 2 methods in calculating it and in the solutions for the questions they will use 1 method for certain problems and then switch to another one when I just want to be able to use one for both. It’s hard to do that when I approach the question with one method and I want to be able to figure out what I did wrong but Becker then shows the solution with the other method which doesn’t help me at all.

So I was wondering if someone could show me how to use the alternative method for this question? (Factoring each transaction rather than using a total share x period outstanding method?)

Thank you.

Question:

Based on the stock transactions below, what is the weighted average number of shares outstanding as of December 31, Year 1, which should be used in the calculation of basic earnings per share in financial statements issued on March 1, Year 2?

-1/1/1 Beginning Balance : 1,000,000 shares

-4/1/Year 1 Issued 40,000 shares

-6/1/Year 1 50% stock dividend

-2/15/Year 2 2 for 1 stock split

-3/15/Year 2 Issued 40,000 shares

Solution:

100,000 * 3/12 * 1.5 * 2 = 75,000
130,000 * 9/12 * 1.5.* 2 = 272,500

75,000 +292,000 = 367,500

How do I calculate this using the other method? Thank you!