The controller of Red Lake Corporation has requested assistance in determining income, basic earnings per share, and diluted earnings per share for presentation on the company's income statement for the year ended September $30,$ Year $5.$ As currently calculated, Red Lake's net income is $$540,000$ for the fiscal year ending September $30,$ Year $5.$

Your working papers disclose the following opening balances and transactions in the company's capital stock accounts during the year:

Common stock $($at October $1,$ Year $4,$ stated value $$10,$ authorized $300,000$ shares; effective December $1,$ Year $4,$ stated value $$5,$ authorized $600,000$ shares$)$:

Balance, October $1,$ Year $4$issued and outstanding $60,000$ shares

December $1,$ Year $460,000$ shares issued in a $2-$for$-1$ stock split

December $1,$ Year $4280,000$ shares $($stated value $$5)$ issued at $$39$ per share

Treasury stock$$common:

March $3,$ Year $5$purchased $40,000$ shares at $$38$ per share

April $1,$ Year $5$sold $40,000$ shares at $$40$ per share

Noncompensatory stock purchase warrants, Series A $($initially$,$ each warrant was exchangeable with $$60$ for $1$ common share; effective December $1,$ Year $4,$ each warrant became exchangeable for $2$ common shares at $$30$ per share$)$:

October $1,$ Year $425,000$ warrants issued at $$6$ each

Noncompensatory stock purchase warrants, Series B $($each warrant is exchangeable with $$40$ for $1$ common share$)$:

April $1,$ Year $520,000$ warrants authorized and issued at $$10$ each

First mortgage bonds, $5(1)/(2)\%,$ due Year $14($nonconvertible; priced to yield $5\%$ when issued$)$:

Balance October $1,$ Year $4$authorized$,$ issued, and outstanding$$the face value of $$1,400,000$

Convertible debentures, $7\%,$ due Year $21($initially$,$ each $$1,000$ bond was convertible at any time until maturity into $20$ common shares; effective December $1,$ Year $4,$ the conversion rate became $40$ shares for each bond$)$:

October $1,$ Year $4$authorized and issued at their face value $($no premium or discount$)$ of $$2,400,000$

The following table shows the average market prices for the company's securities during Year $4$Year $5$:

Average for Year Ended

September $30,$ Year $5$

Common stock $37\mathrm{.}50*$

First mortgage bonds $87$

Convertible debentures $115$

Series A warrants $15$

Series B warrants $9(1)/(2)$

$*$$Adjusted for stock split

Required:

Prepare a schedule computing:

the basic earnings per share.

the diluted earnings per share that should be presented on Red Lake's income statement for the year ended September $30,$ Year $5$

A supporting schedule computing the numbers of shares to be used in these computations should also be prepared. Assume an income tax rate of $30\%.$ Round EPS to two decimal places.