Francis Company has 33,600 shares of common stock outstanding at the beginning of 2013. Francis issued 4,200 additional shares on May1 and 2,800 additional shares on September 30. It also has two convertible securities outstanding at the end of 2013. These are:

1. Convertible preferred stock: 3,500 shares of 8.0%, $50 par, preferred stock were issued on January 2,2010, for $55 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 face value of $350,000 and an interest rate of 5.0% were issued at par in 2012. Each $1,000 bond is convertible into 20 shares of common stock. To date , no bonds have been converted.

Francis earned net income of $85,000 during 2013. 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 2013.

Weighted average shares outstanding:______________ shares

2. Calculate basic earnings per share for 2013. If required, round your answer to the nearest cent.

Basic earnings per share:$_______

3. Calculate diluted earnings per share for 2013 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to the nearest cent.

Diluted earnings per share: $________

Incremental earnings per share:

Bonds:$_______

Preferred: $_________

4a. Assume the same facts as above except that net income included a loss from discounted operations of $19,500 net of income taxes. Compute basic EPS. You do not have to calculate diluted EPS for this case.

Basic earning per share:$________

4b. Show how the basic EPS you calculated should be reported to shareholders. You do not have to calculate diluted EPS.

_____________________ $______________

_____________________ ______________

_____________________ $_______________