Part a

The following information pertains to Torque Corp.s outstanding stock for 2021: Common stock, $1 par value Shares outstanding, 1/1/2021 60,000 2-for-1 stock split, 4/1/2021 Shares issued, 7/1/2021 30,000 Preferred stock, $10 par value, 6% cumulative Shares outstanding, 12/31/2021 12,000 Torque reported net income for 2021 of $500,000. Required Compute Torque Corp.s basic earnings per share for 2021.

Part b

Farewell Inc. had 500,000 shares of common stock outstanding throughout 2021. Farewell's net income for the year ended December 31, 2021, was $2.5 million. The income tax rate is 25%. Farewell granted 10,000 stock options to its executives on December 15, 2020. Each option gives its holder the right to buy 20 shares of common stock at an exercise price of $29 per share. The options vest after one year. The market price of Farewells common stock averaged $30 per share during 2021. Required Compute Farewells basic and diluted earnings per share for 2021.