Problem #16: Basic and Diluted EPS Calculations (involving multiple securities):

Assume that the following data relative to Kitana Company for 2013 is available regarding outstanding securities at year end:

1] $1,000,000 8% Cumulative Convertible Preferred Stock

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

2] 90,000 Stock Options

exercisable at the option price of $25 per share. Average

market price per share in 2013 is $30

Additional Information:

The Weighted average number of shares at end of 2013 is 1,330,000 and net income for 2013 is $2,100,000

Instructions

(a) Compute the basic earnings per share for 2013.

(b) Compute the diluted earnings per share for 2013.