Problem: Assume that the following data relative to Eddy Company for 2004 is available:
Net Income $1,400,000
Transactions in Common Shares Change Cumulative
Jan. 1, 2004, Beginning number 500,000
Mar. 1, 2004, Purchase of treasury shares (60,000) 440,000
June 1, 2004, Stock split 2-1 440,000 880,000
Nov. 1, 2004, Issuance of shares 120,000 1,000,000
8% Cumulative Convertible Preferred Stock
Sold at par, 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 2004, $30 (market price and option price
adjusted for split). 60,000 shares
Instructions:
(a) Compute the basic earnings per share for 2004. (Round to the nearest penny.)
(b) Compute the diluted earnings per share for 2004. (Round to the nearest penny.)