The net income of Foster Furniture, Inc., amounted to $1,800,000 for the current year.

a. Compute the amount of earnings per share assuming that the shares of capital stock outstanding throughout the year consisted of:

1. 400,000 shares of $1 par value common stock and no preferred stock.

2. 100,000 shares of 8 percent, $100 par value, cumulative preferred stock and 300,000 shares of $5 par value common stock.

b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted?