Information concerning the capital structure of Piper Corporation is as follows:
December 31,
2011 2010
Common stock 150,000 shares 150,000 shares
Convertible preferred stock 15,000 shares 15,000 shares
9% convertible bonds $2,400,000 $2,400,000
During 2011, Piper paid dividends of $1.20 per share on its common stock and $3.00 per share on its preferred stock. The preferred stock is convertible into 30,000 shares of common stock. The 9% convertible bonds are convertible into 75,000 shares of common stock. The net income for the year ended December 31, 2011, was $600,000. Assume that the income tax rate was 30%.
REQUIRED:
1. What should be the basic earnings per share for the year ended December 31, 2011, rounded to the nearest penny?
2. What should be the diluted earnings per share for the year ended December 31, 2011, rounded to the nearest penny?