The company had the following shares of stock outstanding during the year. Data regarding dividend privileges and net income are also given.
Common shares outstanding: 320,000 for the entire year
Participating preferred shares outstanding: 100,000 shares for the entire year
Net income: $1,000,000
Dividends on participating preferred shares: $1.00 per share plus a per-share increase
80% as large as the per-share increase of common dividends above $0.50 per share
Common dividends paid for the year: $1.00 per share
Compute basic earnings per share for both the common shares and the participating preferred shares.