Reference no: EM131795614

At January1,2013 Myco Corporation had outstanding the following securities:

$1,000,000, 5% cumulative convertible preferred shares,$50 par; each share is convertible into 2 shares of common stock.

7% convertible bonds, $2,000,000 face value issued at par ($1,000) per bond. Each bond is convertible into 30 shares of common stock

$6,000,000 common stock, $10 par value

Additional information:

a. On April 1, 2013, Myco purchased 100,000 shares of its common stock as treasury stock.

b. June 30, 2013, Myco issued a 4%stock dividend

c. On October 31, 2013, 50,000 shares of treasury stock were sold.

d. Common stock option outstanding as of 12/31/12 and exercisable in 2013 to purchase 40,000shares at an exercise price of $30

e. The market price of the stock peaked on October 31,2013 at $50 an on December 31, 2013 the market price of the stock closed at $30,; the average market price of stock during 2013 was $40

f. Net income for the year ended December 31, 2013 was $1,500,000

g. The income tax rate for 2013 was 40%

Required:

1. Compute Myco 's basic earnings per share for the year ended December 31, 2013.

2. Compute Myco's diluted earnings per share for the year ended December 31, 2013.

Show the calculation at how you arrived at your answer.