Help me understand how convertible preferred stock works?

1. Terry Company has 24,000 shares of common stock outstanding at the beginning of 2016. Terry 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 :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%.

number of shares of common stock that Terry should use in calculating basic earnings per share for 2016.

Weighted average shares outstanding:

Basic earnings per share:

diluted earnings per share for 2016 and the incremental EPS of the preferred stock and convertible bonds:

Incremental earnings per share

Bonds:

Preferred:

Assume the same facts as above except that net income included a loss from discontinued operations of $18,000 net of income taxes. Compute basic EPS. You do not have to calculate diluted EPS for this case.

Basic earning per share:

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

Francis Company

EPS Computations

EPS Based on:

Income from continuing operations

Loss from discontinued operations

Net income