Francis company has 21,600 shares of common stock outstanding at the beginning o

ID: 2501587 • Letter: F

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Francis company has 21,600 shares of common stock outstanding at the beginning of 2013. Francis issued 2,700 additional shares on may 1 and 1,800 additional shares on September 30. It also has been two convertible securities outstanding at the end of 2013. These are:
1. Convertible preferred stock: 2,250 shares of 8.0%, $50 par, preferred stock were issued on January 2, 2010, for $60 per share. Each of preferred stock is convertible into 3 shares of common stock. current dividends has been declared and paid. To date, no preferred stock has been converted.
2. Convertible bonds: bonds with a face value of $225,000 and an interest rate of 6.0% were issued at par in 2012. Each $1,000 bond is convertible into 25 shares of common stock. To date, no bonds have been converted.

Francis earned net income of $75,000 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 pet share for 2013.

Weighted average shares outstanding= --------- shares

2. calculate basis 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 answer to the nearest cent.

incremental EPS:

Bonds=$-------
preferred =$-------

4. Assume the same facts as above except that net income included a loss from discounted operations of $12,900 net of income taxes. compute basis EPS. You do not have to calculate diluted EPS for this case. If required, round your answer to the nearest cent.

Basic EPS=$--------

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

Explanation / Answer

4. In case of Net loss, EPS will be as follows

As per IAS 33, an entity whose securities are publicly traded (or that is in process of public issuance) must present, on the face of the statement of comprehensive income, basic EPS

Profit attributable to equity shareholders $66000

Shares used in calculation oustanding $23850

Basic Earnings per share $2.76 per share

1 Weighted Avg. no of shares outstanding for Basic EPS Date Shares Months Weighted Average Beginning 21600 12/12 21600 May-01 2700 8/12 1800 Sep-30 1800 3/12 450 23850 2 Basis earnings per share for 2013 Basic EPS = Net Income - preferred Dividends Weighted Avg. no of shares outstanding = (75000 -9000) 23850 = 2.76

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Francis company has 21,600 shares of common stock outstanding at the beginning o

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Francis company has 21,600 shares of common stock outstanding at the beginning o

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