On January 1 2018 Tonge Industries had outstanding 700000 co

On January 1, 2018, Tonge Industries had outstanding 700,000 common shares ($1 par) that originally sold for $25 per share, and 5,000 shares of 10% cumulative preferred stock ($100 par), convertible into 50,000 common shares. On October 1, 2018, Tonge sold and issued an additional 12,000 shares of common stock at $37. At December 31, 2018, there were 22,000 incentive stock options outstanding, issued in 2017, and exercisable after one year for 22,000 shares of common stock at an exercise price of $34. The market price of the common stock at year-end was $52. During the year, the price of the common shares had averaged $44. Net income was $840,000. The tax rate for the year was 40%. Required Compute basic and diluted EPS for the year ended December 31, 2018. (Enter your answers in thousands.) NumeratorDenominatorEarnings per share Basic Diluted

Solution

Diluted EPS

Basic EPS
		Common Stock	Weightage	Weighted Average
Jan-01	Opening balance	700000	12/12	700000
Oct-01	Issued	12000	3/12	3000
			No of shares	703000