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Rayleigh Corporation started 2020 with 600,000 common shares outstanding
Rayleigh Corporation started 2020 with 600,000 common shares outstanding. Rayleigh follows IFRS. During 2020, Rayleigh completed the following share transactions:
June 30: Repurchased 100,000 shares
July 31: Issued 200,000 shares
August 31: 2 for 1 stock split
October 31: Issued 200,000 shares
Instructions
Calculate the weighted average number of shares outstanding for 2020. Use a table to show your calculations. Clearly indicate your final answer.
Expert Solution
Calaculation of weighted average number of shares outstanding for 2020
| Date | Shares as on date | Change in no. of shares | No. of shares | Holding period | weighted average shares |
| Jan 1 | Opening common shares, 600000 | - | 600000 | 6 months (jan 1 to june 30) | 300000 (600000×6/12) |
| June 30 | Opening common shares, 600000 |
Repurchased shares, (100000) |
500000 (600000-100000) |
1 month (july 1 to july 31) | 41666.67 (500000×1/12) |
| July 31 | Common shares, 500000 | Issued new shares, 200000 | 700000 (500000+200000) | 1 month (july 31 to Aug 31) | 58333.33 (700000×1/12) |
| Aug 31 | Common shares, 700000 | stock split, 2 for 1 | 1400000 [700000×(2/1)] | 2 months (Sept 1 to Oct 31) | 233333.33 (1400000×2/12) |
| Oct 31 | Common shares, 1400000 | Issued shares, 200000 | 1600000 (1400000+20000) | 2 months (Oct 31 to Dec 31) | 266666.67 (1600000×2/12) |
| 900000 shares |
Weighted average no. of shares = 900000 shares.
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