On December 31, 2012, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, cumulative preferred stock issued and outstanding which

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On December 31, 2012, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, cumulative preferred stock issued and outstanding which are convertible into 50,000 common shares. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2013. On February 28, 2013, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2013, was $2,100,000. The income tax rate is 40%. Also, as a part of a 2012 agreement for the acquisition of Merrill Cable Company, another 23,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2014, if Merrill's 2014 net income is at least $500,000. In 2013, Merrill's net income was $630,000. As part of an incentive compensation plan, Dow granted incentive 8,000 stock options to division managers at October 31, 2012. Each option permits its holder to buy one share (already adjusted for the stock dividend) of common stock at an exercise price of $24 before 12/31/2015. The market price of the common stock averaged $32 per share during 2013. On July 12, 2011, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2013.