PROBLEM 3A

The following information is available for Leko Co.: Assume net income is $800,000 and the weighted-average common shares outstanding are 55,000. Assume extraordinary loss is $130,000. Additional information:

a) 5% nonconvertible, cumulative preferred stock, par $100, 15,000 shares issued and outstanding the entire year.

b) Options and warrants to purchase 20,000 shares of common stock at $12 per share. The average market price of common stock during the year was $16 per share. The options and warrants were outstanding all year. Required:

1. Compute Basic EPS and Diluted EPS as per SFAS 128