Upon arrival, you met Mr. Shakin Jell, their Financial Accounting Manager for an initial information gathering session before beginning your work. You should note that Jupp Jellies follows IFRS which has been adopted by all planetary business communities. Mr. Jell informs you that he would like you to assist him in some of the more troubling issues remaining to be resolved. Following a quick snack of a chocolate sundae and strawberry cookies, you went to work on the manager's problems.

The company had begun their calendar fiscal year of 2018 with 560,000 common shares issued and outstanding. Mr. Jell provided you with additional information on the company's equity and debt transactions for the year.

- On February 1, it had issued 84,000 shares; 78,000 shares on May 1 and 43,200 shares on November 1, respectively. L Further on April 1, it had acquired 12,000 shares from the market and had immediately cancelled them.

- The company also had outstanding at the beginning of the year, 8% convertible preferred shares capitalized at $950,000. The preferred shareholders were eligible to convert their shares into 64,000 common shares.

- Jupp Jellies had not declared any dividends since 2015.

- The company also reported convertible debt. These were bonds payable, issued at par on July 1, 2016, for $12,000,000 and paying interest annually at a 5% coupon rate. Each $1,000 par value bond could be converted into 5 common shares of the company. There was no premium recorded for the conversion feature.

- On October 1, 30% of the bondholders submitted their bonds for conversion to the company in exchange for common shares.

- Companies at Jupiter are taxed at a flat rate of 35%.

- Upon inquiring further, Mr. Jell told you about the the two types of options which had been issued in prior years and were outstanding as at the beginning of 2018. Call options had been issued to the management team which enabled them to buy 120,000 common shares at $9.00 each. Put options had been issued to employees which entitled holders to sell 135,000 of the company's common shares to the company for $15.00 each. Jupp Jellies' shares traded at an annual average market price of $12.00 each. This price was not adjusted for the effects of the stock dividends. All options remained outstanding at the end of the year.

- And finally, the company reported net income of $2,331,000. There was nothing to report for Discontinued Operations. The interest effect on the bonds conversion has already been accounted for in this number. With your meeting being concluded, Mr. Jell, almost apologetically, handed you a list of questions he wanted you to resolve and insisted that you support your responses with clear detailed computations. He did add that there would be other questions arising from related transactions which were to follow once this one was resolved.

With your meeting being concluded, Mr. Jell, almost apologetically, handed you a list of questions he wanted you to resolve and insisted that you support your responses with clear detailed computations. He did add that there would be other questions arising from related transactions which were to follow once this one was resolved.

REQUIRED:

a. Determine the weighted average number of shares to determine the basic earnings per share for 2018.