Convertible Preferred Stock, Convertible Bonds, and EPS

Francis Company has 31,200 shares of common stock outstanding atthe beginning of 2016. Francis issued 3,900 additional shares onMay 1 and 2,600 additional shares on September 30. It also has twoconvertible securities outstanding at the end of 2016. Theseare:

1. Convertible preferred stock: 3,250 shares of 9.0%, $50 par,preferred stock were issued on January 2, 2013, for $60 per share.Each share of preferred stock is convertible into 3 shares ofcommon stock. Current dividends have been declared and paid. Todate, no preferred stock has been converted.
2. Convertible bonds: Bonds with a face value of $325000 and aninterest rate of 5.0% were issued at par in 2015. Each $1000 bondis convertible into 25 shares of common stock. To date, no bondshave been converted.

Francis earned net income of $79000 during 2016. The income taxrate is 30%.

Required:

1. Compute the number of shares of common stock that Francisshould use in calculating basic earnings per share for 2016.

Weighted average shares outstanding:  shares

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2. Calculate basic earnings per share for 2016. If required,round your answer to two decimal places.

Basic earnings per share: $

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3. Calculate diluted earnings per share for 2016 and theincremental EPS of the preferred stock and convertible bonds. Ifrequired, round your answers to two decimal places.

Diluted earnings per share: $

Incremental earnings per share
Bonds:	$
Preferred:	$