This is from the Intermediate Accounting 9th edition by authors: Spiceland, Nelson, and Thomas. This is Ch. 19 - 13P. In computing the weighted average, I just don't understand where some of these numbers come from! Can you please tell me how the following numbers were calculated: 50,000; 2,000; (1,000); and (6,000).

(Note: This is a variation of P 19-12, modified to include convertible bonds and contingently issuable shares) On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018 On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,100,000. The income tax rate is 40%. Also, as a part of a 2017 agreement for the acquisition of Merrill Cable Company, another 23,000 shares (already adjusted stock dividend) are to be issued to former Merrill shareholders on December 31, 2019, if Merrill's 2019 net income is at least $500,000. In 2018, Merrill's net income was $630,000 As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted Share Price December 31, 2016 December 31, 2017 December 31, 2018 Options Granted (adjusted for the stock dividend) 8,000 3,000 6,500 $24 $33 The market price of the common stock averaged $32 per share during 2018 On July 12, 2016. Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend) Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2018. Step 4: Compute the total weighted average number of common shares. Details Number of Shares 600,000 50,000 24,000 2,000 Weighted average number of shares held on January 1, 2018 Weighted average number of shares sold on February 28, 2018 Weighted average number of stock dividend shares distributed for shares held on January 1, 2018 Weighted average number of stock dividend shares distributed for shares sold on April 30, 2018 Weighted average number of retired stock Number of exercisable options granted as shares Number of shares assumed reacquired as treasury stock Number of new shares due to agreement Number of new shares due to bond conversion Total weighted average number of shares (1,000) 8,000 (6,000) 23,000 24.000 724,000 Since net income of acquired Company MC has exceeded $500,000, the number of shares would increase by 23,000 as per the agreement. (Note: This is a variation of P 19-12, modified to include convertible bonds and contingently issuable shares) On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018 On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,100,000. The income tax rate is 40%. Also, as a part of a 2017 agreement for the acquisition of Merrill Cable Company, another 23,000 shares (already adjusted stock dividend) are to be issued to former Merrill shareholders on December 31, 2019, if Merrill's 2019 net income is at least $500,000. In 2018, Merrill's net income was $630,000 As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted Share Price December 31, 2016 December 31, 2017 December 31, 2018 Options Granted (adjusted for the stock dividend) 8,000 3,000 6,500 $24 $33 The market price of the common stock averaged $32 per share during 2018 On July 12, 2016. Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend) Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2018. Step 4: Compute the total weighted average number of common shares. Details Number of Shares 600,000 50,000 24,000 2,000 Weighted average number of shares held on January 1, 2018 Weighted average number of shares sold on February 28, 2018 Weighted average number of stock dividend shares distributed for shares held on January 1, 2018 Weighted average number of stock dividend shares distributed for shares sold on April 30, 2018 Weighted average number of retired stock Number of exercisable options granted as shares Number of shares assumed reacquired as treasury stock Number of new shares due to agreement Number of new shares due to bond conversion Total weighted average number of shares (1,000) 8,000 (6,000) 23,000 24.000 724,000 Since net income of acquired Company MC has exceeded $500,000, the number of shares would increase by 23,000 as per the agreement