Vaughn Corporation is preparing the comparative financial statements to be included in the annual report to stockholders. Vaughn employs a fiscal year ending May 31.

Income from operations before income taxes for Vaughn was $1,445,000 and $690,000, respectively, for fiscal years ended May 31, 2018 and 2017. Vaughn experienced a loss from discontinued operations of $375,000 on March 3, 2018. A 40% combined income tax rate pertains to any and all of Vaughn Corporations profits, gains, and losses.

Vaughns capital structure consists of preferred stock and common stock. The company has not issued any convertible securities or warrants and there are no outstanding stock options.

Vaughn issued 39,200 shares of $100 par value, 6% cumulative preferred stock in 2014. All of this stock is outstanding, and no preferred dividends are in arrears.

There were 926,400 shares of $1 par common stock outstanding on June 1, 2016. On September 1, 2016, Vaughn sold an additional 426,000 shares of the common stock at $17 per share. Vaughn distributed a 20% stock dividend on the common shares outstanding on December 1, 2017. These were the only common stock transactions during the past 2 fiscal years.

Determine the weighted-average number of common shares that would be used in computing earnings per share on the current comparative income statement for:

1. Year Ended May 31, 2017

2. Year ended May 31, 2018

3. Starting with income from operations before income taxes, prepare a comparative income statement for the years ended May 31, 2018 and 2017. The statement will be part of Vaughn Corporations annual report to stockholders and should include appropriate earnings per share presentation.