Problem $2-$ Basic and diluted EPS.

Assume that the following data relative to Kane Company for $2022$ is available:

Net Income

Transactions in Ordinary Shares

Jan. $1,2022,$ Beginning number

Mar. $1,2022,$ Purchase of treasury shares

June $1,2022,$ Share split $4-1$

Nov. $1,2022,$ Issuance of shares

$7\%$ Cumulative Convertible Preference Shares

Sold at par, convertible into $400,000$ ordinary shares

$($adjusted for split$).$

$$1,000,000$

Share Options

$(60,000$ options, one ordinary share per option if exercised$)$

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

market price in $2022,$ $$50($market price and option price

adjusted for split$).$

Instructions

$($a$)$ Compute the weighted average number of shares outstanding.

$($b$)$ Compute the basic earnings per share for $2022.($Round to the nearest cents$)$

$($c$)$ Compute the per share effect of convertible preference shares and share options.

$($d$)$ Ranking of the convertible preference shares and share options based on the per share

effect.

$($e$)$ Compute the diluted earnings per share for $2022$ based on the first ranked per share

effect securities$.($Round to the nearest cents$)$

$($f$)$ If the diluted EPS in requirement $e$ is less than the basic EPS in requirement c $,$ then

recompute the diluted EPS for $2022$ based on both the first ranked and second ranked

per share effect securities$.($Round to the nearest cents$)$

$($g$)$ Present the EPS in both Basic EPS and Diluted EPS. $($Round to the nearest cents$)$