The company had 100,000 shares of common stock outstanding on January 1. In addition, as of January 1, the company had issued 500 convertible bonds ($1,000 face value, 10%). The company has no other potentially dilutive securities. The bonds were converted on August 1; 40 shares of common stock were issued in exchange for each bond. Accrued interest on the bonds was recognized and paid on that date. Net income for the year was $200,000. The income tax rate is 40%. Compute

(1) Basic earnings per share and

(2) Diluted earnings per share.