[TNTTN]

Can anybody explains why Q1 does not include previous outstanding shares to calculate the sale/issuance of the stock like in Q2? My answer for Q1 was (100,000*2+50,000)*6/12
Q1:X Co. had the following stock transactions during the fiscal year ended June 30, Year 2:
Beginning stock balance, July 1, Year 1 100,000 shares
2:1 stock split, September 30, Year 1
Issuance of additional shares, January 1, Year 2 50,000 shares
Repurchase of shares, June 23, Year 2 1,040 shares
What was X Co.’s weighted average number of shares outstanding at June 30, Year 2:
Solution:
Beginning balance 100,000 x 12/12 = 100,000
Stock split 100,000 x 12/12 = 100,000
Sale of shares 50,000 x 6/12 = 25,000
Repurchase 1,040 x 1/52 = (20)
Total 224,980

Q2: Balm Co. had 100,000 shares of common stock outstanding as of January 1. The following events
occurred during the year:
4/1 Issued 30,000 shares of common stock.
6/1 Issued 36,000 shares of common stock.
7/1 Declared a 5% stock dividend.
9/1 Purchased as treasury stock 35,000 shares of its common stock. Balm used the cost method to
account for the treasury stock.
What is Balm’s weighted average of common stock outstanding at December 31?
Solution:
Total Shares × Period Outstanding × Adjustment for dividend = Weighted Avg.
100,000 3/12(Jan-Mar) 1.05 26,250
130,000 2/12(Apr-May) 1.05 22,750
166,000 3/12(June-Aug) 1.05 43,575
139,300 4/12(Sept-Dec) 46,433
Weighted Average = 139,008

[Keycat]

Did you notice that the fiscal year in Q1 starts on 7/1-Year1? Your proposed answer accounts only for 6 months instead of 12 and does not even calculate the repurchase of shares.

[Author]

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