Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 24,000 shares of common stock outstanding at the beginning of 2016. Francis issued 3,000 additional shares on May 1 and 2,000 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: 1. Convertible preferred stock: 2,500 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2013, 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. 2. Convertible bonds: Bonds with a face value of $250,000 and an interest rate of 5.5% were issued at par in 2015. Each $1,000 bond is convertible into 20 shares of common stock. To date, no bonds have been converted. Francis earned net income of $72,500 during 2016. The income tax rate is 30%.Solution: Requirement "1" Calculation of Weighted Average Number of Outstanding Shares Particulars Calculation Shares Opening Shares 24000 Issued on May 1 3000*8/12 2000 Issued on Sep 30 2000*3/12 500 Total 26500 Hence, Number of Common Stock to use in calculating basic earning per share for 2016 are 26500 Shares