Hanigan Manufacturing had 1,800,000 shares of common stock outstanding as of January 1, 2014, and 900,000 shares

Question:

Hanigan Manufacturing had 1,800,000 shares of outstanding as of January 1, 2014, and 900,000 shares of 10% noncumulative (nonconvertible) preferred stock outstanding. The following events occurred during 2014:
• On February 28, Hanigan sold 60,000 common shares.
• On May 15, Hanigan issued a 4% and paid cash dividends of $1,200,000 to common shareholders and $225,000 to preferred stockholders.
• On July 1, Hanigan repurchased and retired 6,000 common shares.
• On September 1, Hanigan issued $1,000,000 of convertible 10% bonds for par value. Each $1,000 bond certificate is convertible into 40 common shares. Cash settlement is not permitted.
• Under the terms of a separation agreement with its founder and former owner, Mike Hanigan, the company is obligated to issue Mr. Hanigan an additional 60,000 common shares if 2014 net income exceeds $5 million. No shares were issued as of December 31, 2014.
• Hanigan’s net income for 2014 was $6,300,000 and the income tax rate was 40%.

Required:
Compute Hanigan Manufacturing’s basic and diluted earnings per share for 2014.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...