Let's solve each part step-by-step and explain each calculation. --- ## a. **Weighted-average shares for 2024 (for the 2025 comparative income statement)** ### Steps: #### 1. **Shares Outstanding at 12/31/2023**: - 2,000,000 shares were outstanding at the start of 2024. #### 2. **10% Stock Dividend on 9/30/2024**: - New shares issued: 2,000,000 × 10% = **200,000 shares** - Date issued: 9/30/2024, so outstanding for 3/12 months #### 3. **Weighted Calculation:** - 2,000,000 × 12/12 = 2,000,000 - 200,000 × 3/12 = 50,000 #### 4. **Total Weighted-Average Shares:** - 2,000,000 + 50,000 = **2,050,000** ### Explanation: The 200,000 shares from the stock dividend are included only for the portion of the year they were outstanding. --- ## b. **Weighted-average shares for 2025 (for the 2025 comparative income statement)** ### Steps: #### 1. **Shares Outstanding at 1/1/2025**: - Total shares after 2024 = 2,200,000 (2,000,000 + 200,000 dividend) #### 2. **Shares Issued for Cash on 3/31/2025**: - New shares: 2,000,000 - Outstanding for 9/12 months #### 3. **Weighted Calculation:** - 2,200,000 × 12/12 = 2,200,000 - 2,000,000 × 9/12 = 1,500,000 #### 4. **Total Weighted-Average Shares:** - 2,200,000 + 1,500,000 = **3,700,000** ### Explanation: All shares from the start of the year are counted for the whole year, and new shares from March 31 are counted for 9/12 of the year. --- ## c. **Weighted-average shares for 2025 (for the 2026 comparative income statement)** ### Steps: #### 1. **Stock Split Adjustment**: - A 2-for-1 split occurred on 3/31/2026. - All previous years' shares must be restated as if the split happened at the beginning of all periods. #### 2. **Restate 2025 Shares**: - Weighted-average before split: 3,700,000 (from part b) - After split: 3,700,000 × 2 = **7,400,000** ### Explanation: Comparative statements must show all prior years as if the split occurred at the start of those periods. So, multiply by 2. --- ## d. **Weighted-average shares for 2026 (for the 2026 comparative income statement)** ### Steps: #### 1. **Shares Outstanding at 1/1/2026**: - 4,200,000 shares (from 12/31/2025) - Restated for split: 4,200,000 × 2 = 8,400,000 #### 2. **No Additional Issues in 2026**: - No mention of new issues, so this remains constant. #### 3. **Weighted-Average Shares**: - **8,400,000** shares ### Explanation: All shares for 2026 are after the split, so just double the shares at the start of the year. --- ## **Final Answers Table** | Part | Shares Outstanding | |------|---------------------| | a. | 2,050,000 | | b. | 3,700,000 | | c. | 7,400,000 | | d. | 8,400,000 | --- ### **Conclusion** - For comparative statements, always restate prior years for splits. - Apply stock dividends and new issues based on weighted periods. - Stock splits require retroactive adjustment of all share counts in prior periods.