Question - The following data for the Dojo Company for 2012 is available:
Net Income (after taxes) $2,100,000
Tax Rate 40%
Transactions in Common Shares Change Cumulative
Jan. 1, 2012, Beginning number 700,000
Mar. 1, 2012, Purchase of treasury shares (60,000) 640,000
June 1, 2012, Stock split 2-1 640,000 1,280,000
Nov. 1, 2012, Issuance of shares 120,000 1,400,000
8% Cumulative Convertible Preferred Stock
Sold at par in 2010, convertible into 200,000 shares of common (adjusted for split). $1,000,000
Stock Options
Exercisable at the option price of $25 per share. Average
market price in 2012, $30 (market price and option price adjusted for split). 60,000 shares
8% Bonds Payable
Issued 1,000 nonconvertible debenture bonds at 99, 8% paid annually on 12/31, $1000 maturity (each bond), issued on 1/1/12.
Instructions
(a) Compute the basic earnings per share for 2012.
(b) Compute the diluted earnings per share for 2012.