Reference no: EM132794403

On January 1 of the current year, a company had the following securities in its capital structure:

1. Common stock: 1,000,000 shares authorized; 300,000 shares issued and outstanding.
2. Preferred stock: 20,000 shares of 10%, $100 par noncumulative, convertible preferred stock issued and outstanding. Each preferred share is convertible into 15 common shares.
3. Incentive stock options: Options exercisable to purchase 14,000 common shares for $12 per share. All options were outstanding at the beginning and end of the year.

Additional information:

1. Net income for the year was $500,000.
2. The income tax rate was 25%.
3. During the year, the company declared and paid the standard dividend on the preferred stock.
4. During the year, the average market price of the company's common stock was $14 per share.

problem 1: What is the numerator of Basic EPS for the year?

problem 2: What is the denominator of Basic EPS for the year?

1- 1,300,000

2- 320,000

3- 1,000,000

4- 334,000

5- 300,000