The information below pertains to Barkley Company for 2026.

There were no changes during 2026 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 75,000 shares of common stock at $20 per share.

Instructions

a. Compute basic earnings per share for 2026.

b. Compute diluted earnings per share for 2026.

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Net income for the year 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock Common stock, $10 par value Tax rate for 2026 Average market price of common stock $1,200,000 2,000,000 4,000,000 6,000,000 20% $25 per share