At December 31, 2017, Joe co had 2,000,000 shares of common stock outstanding. On January 1, 2018, Joe had issued 500,000 shares of preferred stock which were convertible into 1,000,000 shares of common stock. During 2018, Joe declared and paid $1,200,000 cash dividends on the common stock and $400,000 cash dividends on the preferred stock. Net income for the year ended December 31, 2018, was $5,000,000. Assume an income tax rate of 30%.

REQUIRED: For the year ended December 31, 2018, compute:

1)BASIC EARNINGS PER SHARE

2)DILUTED EARNINGS PER SHARE