Question :
Paul Company had 112,000 shares of general stock outstanding during 2013.
Paul also had 10,000 share of translatable preferred stock outstanding during 2013. The noncumulative preferred stock is $100 par, 6 percent, and is convertible into 3 shares of general stock for every share of preferred.
In addition, completely vested inducement stock options for 60,000 shares of general stock at an exercise price of $50 were outstanding at the starting of 2013. The market price of the general stock averaged $56 during the year.
Reported net income for 2013 was $300,000 with a 40 percent tax rate.
Common shareholders received $2 per share dividends after chosen dividends were paid in 2013.
Required:
a. Evaluate the basic earnings per share (rounded to 2 decimal places) for 2013.
b. Evaluate the diluted earnings per share (rounded to 2 decimal places) for 2013.