On June 1, Year 5, Willie Wonka Company and Chocolate Factory Company merged to form Willie Wonka Chocolate Factory Corp. A total of 800,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, Year 7, the company issued an additional 400,000 shares of stock for cash. All 1,200,000 shares remained outstanding on December 31, Year 7. The company also issued $500,000 of 20-year, 6%, convertible bonds at par on July 1, Year 7. Each $1,000 bond is convertible into 40 shares of common stock at any interest payment date. None of the bonds have been converted to date. The company is preparing its annual report for the fiscal year ending December 31, Year 7. The annual report will show earnings per share figures based on a reported net income of $1,540,000 for Year 7. The income tax rate for the year was 20%. Instructions:

A. Compute Basic EPS for Year 7.

B. Compute Diluted EPS for Year 7.