Reference no: EM132421065

Problem: Information concerning the capital structure of the Acme Corporation is as follows:

                                                                      December 31

                                                                       2016                                       2017

Common stock (# of shares)                             90,000                                    90,000

Convertible preferred stock (# of shares)           10,000                                    10,000

8% convertible bonds                                      $1,000,000                             $1,000,000

During 2017 Acme paid dividends of $1 per share on its C/S and $2.40 per share on preferred stock (P/S). The P/S is convertible into 20,000 shares of C/S. The 8% convertible bonds are convertible into 30,000 shares of C/S. Net income for the year ending December 31, 2017 was $285,000, and the company's income tax rate was 40%

Required:

Question 1: Compute the basic eps for 2017.

Question 2: Compute the diluted eps for 2017.