The records of Eureka Gold Company reveal the following capital structure as of December 31, 2011.

To stimulate work incentive and to bolster trade relations, Eureka Gold on May 1, 2012, issued stock options to selected executives, creditors, and others allowing the purchase of 32,000 shares of common stock for $26 a share. Market prices for the stock at various times during 2012 were:

A dividend on preferred stock was paid during the year, and there are no dividends in arrears at year-end. There are no other capital transactions during the year. Net income for 2012 was $589,000.

Instructions: Compute basic and diluted EPS for 2012.

$9 preferred stock, $100 par. 5.000 shares issued and outstanding Additional paid-in capital on preferred stock Common stock. $I0 par. 175,000 shares issued and outstanding Additional paid-in capital on common stock Retained earnings $ 500,000 1 10,000 1,750,000 550,000 778,000