• Pr. 16-146Basic and diluted EPS.

  Assume that the following data relative to Kane Company for 2018 is available:

  Net Income $3,984,000

  Transactions in Common Shares Change Cumulative

  Jan. 1, 2020, Beginning number 650,000,000

  Apr. 1, 2020, Purchase of treasury shares (50,000) 600,000

  June 1, 2020, Stock split 2-1 600,000 1,200,000

  Dec 1, 2020, Issuance of shares 200,000 1,400,000

  5% Cumulative Convertible Preferred Stock

  Sold at par, convertible into 200,000 shares of common

  (adjusted for split). $1,000,000

  Stock Options

  Exercisable at the option price of $30per share. Average

  market price in 2018, $35 (market price and option price

  adjusted for split). 60,000 shares

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• Dilutive Securities and Earnings per Share

  Pr. 16-146 (Cont.)

  Instructions

  (a) Compute the basic earnings per share for 2018. (Round to the nearest penny.)

  (b) Compute the diluted earnings per share for 2018. (Round to the nearest penny.)

  Ans: NA, LO: 5, Bloom: AP, Difficulty: Difficult, Min: 10-15, AACSB: Analytic, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Pr