Answer:
basic earnings per share = $1.14
diluted earnings per share = $1.02
Explanation:
net income = $178,905
preferred stocks = 28,000 x 6% x $50 = $84,000
January 1, 100,000 shares outstanding x 12/12 = 100,000
February 28, purchased -22,000 treasury stocks x 10/12 = -18,333
September 30, sold 5,800 treasury stocks x 3/12 = 1,450
total weighted average stocks = 83,117
diluted stocks = [($48 - $38) / $48] x 48,000 = 10,000
basic earnings per share = (net income - preferred dividends) / weighted average stocks = ($178,905 - $84,000) / 83,117 stocks = $1.14
diluted earnings per share = (net income - preferred dividends) / (weighted average stocks + diluted stocks) = ($178,905 - $84,000) / (83,117 + 10,000 diluted stocks) = $1.02
