Cullen Corporation Ltd. has the following capital structure at December 31, 2011, its fiscal year end:

The following additional information is available.
1. On July 31, 2011, Cullen Corporation exchanged common shares for a large piece of equipment.
2. Income before discontinued operations for 2011 was $950,000, and a loss from discontinued operations of $150,000 was recorded, net of applicable tax recovery.
3. During 2011, dividends in the amount of $4.00 per share were paid on the preferred A shares.
4. Each $1,000 bond can be converted into 20 common shares.
5. There were unexercised stock options, outstanding since 2008, that allow holders to purchase 20,000 common shares at $40.00 per share.
6. Warrants to purchase 20,000 common shares at $52.00 per share were outstanding at the end of 2012.
7. The average market value of the common shares for 2011 was $50.00.
8. Cullen€™s tax rate is 40%.
9. Cullen declared and paid a $100,000 dividend to common shareholders on June 1, 2011.
Instructions
(a) Determine the weighted average number of common shares that would be used in calculating earnings per share for the year ended December 31, 2011.
(b) Starting with the heading €œIncome before discontinued operations,€ prepare the bottom portion of the income statement for the year ended December 31, 2011, including all necessary earnings per share disclosures.
(AICPA adapted)

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2011 2010 Number of common shares Number of non-convertible, non-cumulative preferred A shares Amount of 7% convertible bonds 375,000 10,000 $2,000,000 330,000 10,000 $2,000,000