On January 1,2018,Edward Corporation had 10,000 shares of $6 par value common stock and 10,000 shares of 8%,$100 par value convertible preferred stock outstanding.The preferred shares carried a 3-for-1 conversion privilege.On October 1,2018,all of the preferred shares were converted to common.What number of shares must Edward use in computing basic earnings per share at December 31,2018?

Question

Quizplus · Accepted Answer

Before conversion:
- Common shares: 10,000
- Preferred shares: 10,000 / 3 = 3,333.33

After conversion (assuming no other shares issued or retired):
- Common shares: 10,000 + 3,333.33 = 13,333.33

Therefore, the number of shares Edward must use in computing basic earnings per share at December 31, 2018 is 13,333 (rounded to nearest whole number), which is answer choice A.

On January 1,2018,Edward Corporation Had 10,000 Shares of $6 Par