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Compute the diluted earnings per share

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Question - Assume that the following data relatives to King Company for 2013 is available:

Net Income $2,100,000

Transactions in Common Shares Change Cumulative

Jan. 1, 2013, Beginning number 700,000

Mar. 1, 2013, Purchase of treasury shares (60,000) 640,000

June 1, 2013, Stock split 2-1 640,000 1,280,000

Nov. 1, 2013, Issuance of shares 180,000 1,460,000

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 2013, $30 (market price and option price adjusted for split). 90,000 shares

Required -

(a) Compute the basic earnings per share for 2013.

(b) Compute the diluted earnings per share for 2013.

Reference no: EM132914909

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