CASE 6–5A Information concerning the capital structure of Dole Corporation is reproduced below:

DECEMBER 31 Year 5 Year 6 Common stock.......................... 90,000 shares 90,000 shares Convertible preferred stock ...... 10,000 shares 10,000 shares 8% convertible bonds .............. $1,000,000 $1,000,000 During Year 6, Dole pays dividends of $1 per share on its common stock and $2.40 per share on its preferred stock. The preferred stock is convertible into 20,000 shares of common stock. The 8% convertible bonds are convertible into 30,000 shares of common stock. Net income for the year ended December 31, Year 6, is $285,000. The income tax rate is 50%.

Required:

a. Compute basic earnings per share for the year ended December 31, Year 6.

b. Compute diluted earnings per share for the year ended December 31, Year 6.