Spencer Inc.'s 2020 earnings of \(\$ 500,000\) reflect a tax rate of \(25 \%\). During the entire year, Spencer had the following securities outstanding:

120,000 shares of common stock 5,000 shares of \(6 \%, \$ 100 \mathrm{par}\), nonconvertible, cumulative preferred stock.

5,000 shares of \(6 \%, \$ 100\) par, cumulative preferred stock, each convertible into 1.75 shares of common stock.

500 bonds, \(\$ 1,000\) face value, \(8 \%\) interest, each convertible into 30 shares of common stock (issued at face value).

200 bonds, \(\$ 1,000\) face value, \(6 \%\) interest, each convertible into 20 shares of common stock (issued at face value).

Required

a. Compute basic EPS.

b. Compute diluted EPS.