Example (Earnings per Share)

The Following Information for 2014 was:

Net Income: $500 Million

Common stock: $1 Par

1/1 Shares Oustanding: 150 million shares

2/1 retied for cash: 24 million shares

7/23: 2 for 1 spilt

9/1 sold for cash: 18 million shares

Preferred stock, 10% $60 par, cumulative, non-convertible: 70 million

Preferred stock, 8%, $50 part,cumulative, convertible into 4 million shares of common stock: 100 million

Incentive Stock Options outstanding, fully vested, for 4 million shares of common stock, exercisable at $15 per share

Bonds Payable, 12.5% convertible into 20 million shares of common stock: 200 million

Additional data:

1) The average market price of the common stock was 20$

2) The convertible preferred stock and the bonds payable had been issued at par in 2012.

3) The tax rate was 40%

Required: Calculate basic and diluted earnings per share for the year ended Dec, 31, 2014. Show your work.

Thank you!