need help trying to understand this question

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  • #203369
    jorden_rowrow
    Participant

    Rudd Corp. had 700,000 shares of common stock authorized and 300,000 shares outstanding at December 31, Year 1. The following events occurred during Year 2:

    January 31 Declared 10% stock dividend

    June 30 Purchased 100,000 shares

    August 1 Reissued 50,000 shares

    November 30 Declared 2-for-l stock split

    At December 31, Year 2, how many shares of common stock did Rudd have outstanding?

    a. 660,000

    b. 560,000

    c. 630,000

    d. 600,000

    The answer is B and I know how they got that, they just added and subtracted the shares. But i have question, why didn't we do the shares multiplied by the months it was used in? I know it has to be in the call of the question but how do i know which one to do. The reason why i'm asking is because i sat there multiplying each share by the months

    #784584
    livealittle
    Participant

    they are asking for how many shares outstanding at a specific date, not the average shares outstanding

    when they ask as of a specific date, that is the number of shares on that date, no matter how long they have been outstanding.

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