Convertible Preferred Stock, Convertible Bonds, and EPSFrancis Company has 21,600 shares of common stock outstanding at the beginning of 2019. Francis issued 2,700 additional shares on May 1 and 1,800 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are: Convertible preferred stock: 2,250 shares of 8.0%, $50 par, preferred stock were issued on January 2, 2016, 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.Convertible bonds: Bonds with a face value of $225,000 and an interest rate of 6.0% were issued at par in 2018. 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 2019. The income tax rate is 30%.Required: 3. Calculate diluted earnings per share for 2019 and the incremental EPS of the preferred stock andconvertible bonds. If required, round your answers to two decimal places.Diluted earnings per share:2.33Incremental earnings per shareBonds:$42.1 хPreferred:2 xFeedback4a. Assume the same facts as above except that net income included a loss from discontinuedoperations of $12,900 net of income taxes. Compute basic EPS. If required, round your answer totwo decimal places.Basic earning per share: $3.31| Х 4b. Show how the basic EPS you calculated should be reported to shareholders. You do not have tocalculate diluted EPS.Francis CompanyEPS ComputationsEPS Based on:Income from continuing operations2.77 XLoss from discontinued operations v0.54Net income3.31

Step 1 Earnings per share (EPS) is calculated as a company's profit divided by the outstanding…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Convertible Preferred Stock, Convertible Bonds, and EPS

Francis Company has 21,600 shares of common stock outstanding at the beginning of 2019. Francis issued 2,700 additional shares on May 1 and 1,800 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are:

Convertible preferred stock: 2,250 shares of 8.0%, $50 par, preferred stock were issued on January 2, 2016, 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.
Convertible bonds: Bonds with a face value of $225,000 and an interest rate of 6.0% were issued at par in 2018. 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 2019. The income tax rate is 30%.

Required:

4b. 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
2.77 X
Loss from discontinued operations v
0.54
Net income
3.31

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