Kishkumen Company had the following capital structure at December 31, 2013 and 2014:

2014 2013

Shares of stock outstanding:

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .776,490.......550,000

$7 convertible preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11,000..........24,000

Bonds outstanding:

71/4%, 10-year convertible bonds . . . . . . . . . . . . . . . . . . . . . . . $1,650,000.....$2,200,000

The following additional information is available.

(a) The conversion terms of the preferred stock and bonds at January 1, 2014, were as follows: Preferred stock, five shares of common for each share of preferred; convertible bonds, 38 shares of common for each $1,000 bond. These terms are to be adjusted for any issued stock dividends or stock splits.

(b) On May 1, 2014, Kishkumen sold an additional 70,000 shares of common stock, and on August 1, 2014, a 10% stock dividend on common shares was declared.

(c) On October 1, 2014, 13,000 shares of preferred stock were converted to 71,500 shares of common stock (5.5 shares common for each share of preferred). The preferred stock was issued at $100 par in 2010.

(d) On December 1, 2014, 25% of the convertible bonds were converted (41.8 shares of common for each bond converted). The bonds were issued at par in 2013.

(e) On December 31, 2014, Kishkumen declared and paid a $7-per-share dividend on outstanding preferred stock. Income for the year was $2,300,000.

(f) Stock options (issued and unexercised) to purchase 70,000 shares of common stock at $30 per share were outstanding at the beginning of 2014. Average market price for 2014 was $46.36. The number of shares was adjusted to 77,000 and the exercise price was adjusted to $27.27 in response to the 10% stock dividend.

(g) Stock warrants to purchase 50,000 shares of common stock at $45 per share were initially attached to the preferred stock. This was adjusted to 55,000 shares at $40.91 per share in response to the 10% stock dividend. The warrants expire on December 31, 2018, and were outstanding at December 31, 2014.

(h) The effective tax rate was 30% for both years.

(i) On February 1, 2015, before the 2014 financial statements were issued, Kishkumen split its common stock 2 for 1.

Instructions:

For the year ended December 31, 2014, compute basic and diluted EPS.