Question

At January1,2013 Myco Corporation had outstanding the followingsecurities: $1,000,000, 5% cumulative convertible preferredshares,$50 par; each share is convertible into 2 shares of commonstock. 7% convertible bonds, $2,000,000 face value issued at par($1,000) per bond. Each bond is convertible into 30 shares ofcommon stock $6,000,000 common stock, $10 par value Additionalinformation: a. On April 1, 2013, Myco purchased 100,000 shares ofits common stock as treasury stock. b. June 30, 2013, Myco issued a4%stock dividend c. On October 31, 2013, 50,000 shares of treasurystock were sold. d. Common stock option outstanding as of 12/31/12and exercisable in 2013 to purchase 40,000shares at an exerciseprice of $30 e. The market price of the stock peaked on October31,2013 at $50 an on December 31, 2013 the market price of thestock closed at $30,; the average market price of stock during 2013was $40 f. Net income for the year ended December 31, 2013 was$1,500,000 g. The income tax rate for 2013 was 40% Required:1.Compute Myco ‘s basic earnings per share for the year endedDecember 31, 2013. 2. Compute Myco’s diluted earnings per share forthe year ended December 31, 2013.