Question: Information concerning the capital structure of the Petrock Corporation is as follows:
December 31,
2013 2014
Common stock 90,000 shares 90,000 shares
Convertible preferred stock 10,000 shares 10,000 shares
8% convertible bonds $1,000,000 $1,000,000
During 2014, Petrock paid dividends of $1 per share on its common stock and $2.40 per share on its preferred stock. The preferred stock is convertible into 20,000 shares of common stock. The 8% convertible bonds are convertible into 30,000 shares of common stock. The net income for the year ending December 31, 2014, was $285,000, and the company's income tax rate was 40%.
Required: 1. What was basic EPS for 2014, rounded to the nearest penny?
2. What was diluted EPS for 2014, rounded to the nearest penny?