At December 31, 2016, St.John's Limited had 4,000,000 common shares outstanding (no preferred shares issued).An additional 250,000 common shares were issued on July 1, 2017, and 500,000 more on October 1, 2017.As well, on April 1, 2017, St.John's issued 10,000, $1,000 face value, 8% convertible bonds.Each bond is convertible into 40 common shares.No bonds were converted in 2017.What is the number of shares to be used in calculating basic earnings per share and diluted earnings per share, respectively, for 2017?

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The number of shares outstanding for basic EPS is the weighted average number of shares outstanding during the year. This is calculated by taking the number of shares outstanding at the beginning of the year and adding the number of shares issued during the year, multiplied by the fraction of the year that they were outstanding. In this case, the number of shares outstanding at the beginning of the year is 4,000,000. The number of shares issued on July 1 is 250,000, and they were outstanding for 6/12 of the year. The number of shares issued on October 1 is 500,000, and they were outstanding for 3/12 of the year. Therefore, the weighted average number of shares outstanding is:4,000,000 + (250,000 * 6/12) + (500,000 * 3/12) = 4,250,000The number of shares outstanding for diluted EPS is the number of shares that would be outstanding if all convertible securities were converted. In this case, there are 10,000 convertible bonds outstanding, each of which is convertible into 40 shares. Therefore, the number of shares that would be outstanding if all bonds were converted is:4,000,000 + (10,000 * 40) = 4,550,000