Instructions

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

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

2. 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