Computing EPS with Multiple Potentially Dilutive Securities

Spencer Inc.'s 2020 earnings of $1,100,000 reflect a tax rate of 25%. During the year, Spencer had the following securities outstanding:

240,000 shares of common stock.

10,000 shares of 6%, $100 par, nonconvertible, cumulative preferred stock.

10,000 shares of 6%, $100 par, cumulative preferred stock, each convertible into 1.75 shares of common stock.

1,000 bonds, $1,000 face value, 8% interest, each convertible into 30 shares of common stock (issued at face value).

400 bonds, $1,000 face value, 6% interest, each convertible into 20 shares of common stock (issued at face value).

Required

a. Compute basic EPS.

b. Compute diluted EPS.