Question: Fountain Inc. has 5,000,000 shares of common stock outstanding on January 1, 2014. It issued an additional 1,000,000 shares of common stock on April 1, 2014, and 500,000 more on July 1, 2014. On October 1, 2014, Fountain issued 10,000 convertible bonds; each one had a $1,000 face value and paid 7% interest. Each bond is convertible into 40 shares of common stock. No bonds were converted during 2014.
Required: What number of shares should be used in computing basic EPS and diluted EPS, respectively?