Reference no: EM132758011

On December 31, 2020, SachsCorp had outstanding 600,000 shares of common stock and 50,000 shares of 8% cumulative preferred stock (par $40).

• April 30, 2021, issued an additional 48,000 shares of common stock
• August 1, 2021, 9,000 shares were retired.
• A 6% stock dividend was declared and distributed on July 1, 2021.

At year-end, there were fully vested incentive stock options outstanding for 90,000 shares of common stock (adjusted for the stock dividend). The exercise price was $24. The market price of the common stock averaged $27 during the year.

• Also outstanding were $1,000,000 face amount of 2% convertible bonds issued in 2018 at par. Each $1,000 bond was convertible into 35 common shares (adjusted for the stock dividend).
• Net income was $1,200,000. The tax rate for the year was 35%.

Required:

Problem 1: Compute basic and diluted EPS (two EPS calculations) for the year ended December 31, 2021. (Show all work for full credit. Round your answers to 3 decimal places.)