Problem: The Shamrock Corporation issued 10-year, $5,460,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in 2 years it will increase to 16:1. At the date of issue, the bonds were sold at 98. Bond discount is amortized on a straight-line basis. Shamrock's effective tax was 35%. Net income in 2017 was $8,000,000, and the company had 2,185,000 shares outstanding during the entire year.
Required: Determine the basic and diluted earnings per share.
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