onvertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 26,400 shares of common stock outstanding at the beginning of 2019. Francis issued 3,300 additional shares on May 1 and 2,200 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are: Convertible preferred stock: 2,750 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2016, for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted. Convertible bonds: Bonds with a face value of $275,000 and an interest rate of 6.0% were issued at par in 2018. Each $1,000 bond is convertible into 25 shares of common stock. To date, no bonds have been converted. Francis earned net income of $65,000 during 2019. The income tax rate is 30%. Required: 1. Compute the number of shares of common stock that Francis should use in calculating basic earnings per share for 2019. Weighted average shares outstanding: fill in the blank 381f99fa806ff94_1 shares 2. Calculate basic earnings per share for 2019. If required, round your answer to two decimal places. Basic earnings per share: $ fill in the blank 9392bef5a03cff6_1 3. Calculate diluted earnings per share for 2019 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to two decimal places. Diluted earnings per share: $fill in the blank 159d43019faa015_1 Incremental earnings per share Bonds: $fill in the blank 159d43019faa015_2 Preferred: $fill in the blank 159d43019faa015

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 28E

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Convertible Preferred Stock, Convertible Bonds, and EPS

Francis Company has 26,400 shares of common stock outstanding at the beginning of 2019. Francis issued 3,300 additional shares on May 1 and 2,200 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are:

Convertible preferred stock: 2,750 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2016, for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted.
Convertible bonds: Bonds with a face value of $275,000 and an interest rate of 6.0% were issued at par in 2018. Each $1,000 bond is convertible into 25 shares of common stock. To date, no bonds have been converted.

Francis earned net income of $65,000 during 2019. The income tax rate is 30%.

Required:

1. Compute the number of shares of common stock that Francis should use in calculating basic earnings per share for 2019.

Weighted average shares outstanding: fill in the blank 381f99fa806ff94_1 shares

2. Calculate basic earnings per share for 2019. If required, round your answer to two decimal places.

Basic earnings per share: $ fill in the blank 9392bef5a03cff6_1

3. Calculate diluted earnings per share for 2019 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to two decimal places.

Diluted earnings per share: $fill in the blank 159d43019faa015_1

Incremental earnings per share
Bonds:	$fill in the blank 159d43019faa015_2
Preferred:	$fill in the blank 159d43019faa015_3

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