The following information pertains to Ceil Co., a company whose common stock trades in a public market: Shares outstanding at 1/1 100,000 Stock dividend at 3/31 24,000 Stock issuance at 6/30 5,000 What is the weighted-average number of shares Ceil should use to calculate its basic earnings per share for the year ended December 31?

a. 129,000

b. 120,500

c. 126,500

d. 123,000

c. 126,500

Explanation:

The computation of the weighted-average number of shares is shown below:

= Shares outstanding + Stock dividend + Stock issuance

= $100,000 + $24,000 + $2,500

= $126,500

The stock issuance would be

= $5,000 * 6 months : 12 months

= $2,500

The 6 months is calculated from January 1 to June 30

The stock dividend is to be outstanding at the beginning year i. e January 1