Problem #$10$: Basic and Diluted EPS Calculations $($involving

only a single debt security$)$:

In $2018$ the Gremlin Enterprises issued, at par, $150,$ $$1,000,10\%$

bonds, each convertible into $100$ shares of common stock.

Gremlin had revenues of $$40,000$ and expenses other than

interest and taxes of $$18,000$ for $2019.($Assume that the tax rate

is $40\%.)$ Throughout $2019,4_{,}{000}_{?}$ shares of common stock were

outstanding; none of the bonds were converted or redeemed.

Gremlin's Net Income is calculated as follows:

a$)$ Calculate the basic earnings per share for $2019$ :

b$)$ Calculate the diluted earnings per share for $2019$ :