On January 1, 2013, Tonge Industries had outstanding 440,000 common shares (par $l) that originally sold for

Question:

On January 1, 2013, Tonge Industries had outstanding 440,000 common shares (par $l) that originally sold for $20 per share, and 4,000 shares of 10% cumulative preferred stock (par $100), convertible into 40,000 common shares.

On October 1, 2013, Tonge sold and issued an additional 16,000 shares of common stock at $33. At December 31, 2013, there were incentive stock options outstanding, issued in 2012, and exercisable after one year for 20,000 shares of common stock at an exercise price of $30. The market price of the common stock at year-end was $48. During the year the price of the common shares had averaged $40.

Net income was $650,000. The tax rate for the year was 40%.

Required:

Compute basic and diluted EPS for the year ended December 31, 2013.

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...