1. Basic and diluted EPS.
Assume that the following data relative to Kane Company for 2010 is available:
Net Income $2,800,000
Transactions in Common Shares Change Cumulative
Jan. 1, 2010, Beginning number 720,000
Mar. 1, 2010, Purchase of treasury shares (53,400) 666,600
June 1, 2010, Stock split 2-1 666,600 1,333,200
Nov. 1, 2010, Issuance of shares 228,000 1,561,200
8% Cumulative Convertible Preferred Stock
Sold at par, convertible into 180,000 shares of common
(adjusted for split). $900,000
Stock Options
Exercisable at the option price of $25 per share. Average
market price in 2010, $30 (market price and option price
adjusted for split). 93,000 shares
Instructions
(a) Compute the basic earnings per share for 2010. (Round to the nearest penny.)
(b) Compute the diluted earnings per share for 2010. (Round to the nearest penny.)
(c) Compute weighted average shares outstanding for 2010. (Round to the nearest penny.)