#2) The following information was taken from the books and records of Ludwick, Inc.:

1. Net income $ 410,000

2. Capital structure: a. Convertible 6% bonds. Each of the 300, $1,000 bonds is convertible into 40 shares of common stock at the present date and for the next 10 years. $ 300,000

b. Convertible 5% cumulative preferred stock. Each of the 10,000 shares of the $100 par value preferred stock is convertible into 3 shares of common stock. $1,000,000

c. $10 par common stock, 200,000 shares issued and outstanding during the entire year. $2,000,000

d. Stock warrants outstanding to buy 24,000 shares of common stock at $15 per share.

3. Other information:

a. Bonds converted during the year None

b. Income tax rate 30%

c. Convertible debt and preferred stock were outstanding the entire year

d. Average market price per share of common stock during the year $30

e. Warrants were outstanding the entire year

f. Warrants exercised during the year None

Instructions:

Compute basic and diluted earnings per share. Show your supporting calculations.