The following information was taken from the books and records of Ludwick, Inc.:
1. Net income $ 280,000
2. Capital structure:
a. Convertible 6% bonds. Each of the 300, $1,000 bonds is convertible
into 50 shares of common stock at the present date and for the next
10 years. 300,000
b. $10 par common stock, 200,000 shares issued and outstanding
during the entire year. 2,000,000
c. Stock warrants outstanding to buy 16,000 shares of common stock
at $20 per share.
3. Other information:
a. Bonds converted during the year None
b. Income tax rate 30%
c. Convertible debt was outstanding the entire year
d. Average market price per share of common stock during the year $32
e. Warrants were outstanding the entire year
f. Warrants exercised during the year None
Instructions
Compute basic and diluted earnings per share.