Reference no: EM132835215

Question - On January 1, 2020, Pam had 960,000 shares of common stock issued and outstanding. On March 1, 2020 Pam issued 24,000 shares of common stock and on November 30, 2020 Pam purchased 36,000 shares of her common stock.

Throughout 2020, Pam had 10,000 shares of 4%, $100 par value convertible preferred stock issued outstanding. Each share of her convertible preferred stock can be converted into 5 shares of Pam's common stock.

Pam's net income for 2020 was $3,000,000 and her income tax rate was 20%. During 2020 Pam paid cash dividends of $966,000 on her common stock and $40,000 on her convertible preferred stock.

During all of 2020, Pam had 200,000 outstanding and exercisable employee stock options that were granted to employees during 2018. Each option has an exercise price of $20 per share. During 2020, the average market price of Pam's common stock was $32 per share.

During all of 2020, Pam had 300,000 outstanding and exercisable employee stock options that were granted to employees during 2019. Each option has an exercise price of $33 per share.

During all of 2020, Pam had $4,000,000 of 4%, 10-year convertible bonds. Pam issued the bonds at par during 2017. The bonds can be converted into 40,000 shares of Pam's common stock.

During all of 2020, Pam had $8,000,000 of 10%, 40-year convertible bonds. Pam issued the bonds at par during 2005. The bonds can be converted into 160,000 shares of Pam's common stock.

Required -

1. For the year ended 12-31-20, what will Pam report as basic EPS?

2. For the year ended 12-31-20, what will Pam report as diluted EPS?