Zolar Corporation reported basic earnings per share of \(\$ 2.18(\$ 22,875,000 / 10,500,000)\) based on the following data.

After examining Zolar's records, we note that Zolar acquired and retired 4 million shares on April 1, 2020, and issued \(1,000,000\) shares on September 30, 2020. No equity securities besides common stock are outstanding, and Zolar has no convertible securities or stock options outstanding.

Required

a. Is Zolar's basic EPS calculation of \(\$ 2.18\) per share accurate?

b. Revise the EPS calculation if we believe it is incorrect.

c. Now assume that in addition to the information provided above, Zolar has outstanding 100,000 shares of \(\$ 100\) par, \(5 \%\) cumulative preferred, issued on September 9, 2014. The annual dividend was declared and paid in 2020 . Revise the EPS calculation.

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Net income.. Common shares January 1, 2020 December 31, 2020 Average number of shares outstanding. $22,875,000 12,000,000 9,000,000 10,500,000