Assume that the following data relatives to King Company for 2013 is available:

Net Income $2,100,000

Transactions in Common Shares Change Cumulative

Jan. 1, 2013, Beginning number 700,000

Mar. 1, 2013, Purchase of treasury shares (60,000) 640,000

June 1, 2013, Stock split 2-1 640,000 1,280,000

Nov. 1, 2013, Issuance of shares 180,000 1,460,000

8% Cumulative Convertible Preferred Stock

Sold at par, convertible into 200,000 shares of common

(adjusted for split). $1,000,000

Stock Options

Exercisable at the option price of $25 per share. Average

market price in 2013, $30 (market price and option price

adjusted for split). 90,000 shares

Instructions

(a) Compute the basic earnings per share for 2013. (5 marks)

(b) Compute the diluted earnings per share for 2013. (6 marks)