Problem: Woolery, Inc. had 50,000 shares of common stock outstanding at January 1, 2006.
On March 31, 2006, an additional 12,000 common shares were sold for cash.
Woolery also had $4,000,000 of 6% convertible bonds outstanding throughout the year. The bonds are convertible into 40,000 shares of common stock.
Net income for the year was $350,000. The tax rate is 35%.
Required: Compute basic earnings per share and diluted earnings per share for the year ended December 31, 2006.