Backhome Companys net income for 2020 is $650,000, and 86,000 shares of common were issued and outstanding as of January 1, 2020. On June 30, 2020, the company repurchased 20,000 of its shares for $25 each. The only potentially dilutive securities outstanding were 25,000 executive stock options issued during 2019, each exercisable for one share at $20.50; none of these have been exercised. The average market price of Backhomes stock during 2020 was $26.

Instructions

a) Compute basic earnings per share as it should be shown on the income statement. Show all calculations.