To compute the weighted-average number of shares for De Soto Inc. for 2011, you will need to work backward from December 31, 2011, and consider the various stock transactions that occurred throughout the year.
Here is a step-by-step process to compute the weighted-average number of shares:
1. Start with the number of shares outstanding on December 31, 2011. This will be the final number that you want to compute.
2. Work backward from December 31 and consider each stock transaction in chronological order:
- Oct. 1: Issued a 10% stock dividend. To calculate the additional shares from the dividend, multiply the current number of shares by 10% (0.10) and add this to the current number of shares.
- July 1: Sold 15,000 shares of common stock. Subtract 15,000 shares from the current number of shares.
- May 1: Split common stock 2 for 1. To calculate the new number of shares after the split, multiply the current number of shares by 2.
- Apr. 1: Purchased 3,000 shares of common stock as treasury stock. Subtract 3,000 shares from the current number of shares.
- Feb. 1: Sold 40,000 shares of common stock. Subtract 40,000 shares from the current number of shares.
3. Once you have considered all the transactions, you will have the initial number of shares, which was the weighted-average number of shares for the year. Round this number to the nearest whole number of shares.
That's it! By following these steps and working backward, you can compute the weighted-average number of shares for De Soto Inc. for 2011.