Problem 16-05

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Amy Dyken, controller at Flint Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Flint's financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.

FlintPharmaceutical Industries

Selected Balance Sheet Information

June 30, 2020

Long-term debtNotes payable,10%$1,010,000

9% convertible bonds payable5,030,000

10% bonds payable5,990,000

Total long-term debt$12,030,000

Shareholders' equityPreferred stock,6% cumulative, $50par value,98,000shares authorized,24,500shares issued and outstanding$1,225,000

Common stock, $1 par,9,800,000shares authorized,980,000shares issued and outstanding980,000

Additional paid-in capital4,010,000

Retained earnings6,040,000

Total shareholders' equity$12,255,000

The following transactions have also occurred at Flint.

1.Options were granted on July 1, 2019, to purchase180,000shares at $16per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20per share.2.Each bond was issued at face value. The9% convertible bonds will convert into common stock at50shares per $1,000bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.3.The preferred stock was issued in 2019.4.There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.5.The980,000shares of common stock were outstanding for the entire 2020 fiscal year.6.Net income for fiscal year 2020 was $1,520,000, and the average income tax rate is20%.

For the fiscal year ended June 30, 2020, calculate the following for Flint Pharmaceutical Industries.(Round answers to 2 decimal places, e.g. $2.45.)

(a)Basic earnings per share.

Basic earnings per share$

(b)Diluted earnings per share.

Diluted earnings per share