On January 1, 2018, Tonge Industries had outstanding 440,000 common shares ($l par) that originally sold for$20 per share, and 4,000 shares of 10% cumulative preferred stock ($100 par), convertible into 40,000 commonshares.On October 1, 2018, Tonge sold and issued an additional 16,000 shares of common stock at $33. AtDecember 31, 2018, there were 20,000 incentive stock options outstanding, issued in 2017, and exercisable afterone year for 20,000 shares of common stock at an exercise price of $30. The market price of the common stockat year-end was $48. During the year, the price of the common shares had averaged $40.Net income was $650,000. The tax rate for the year was 40%.Required:Compute basic and diluted EPS for the year ended December 31, 2018.
On January 1, 2018, Tonge Industries had outstanding 440,000 common shares ($l par) that originally sold for
$20 per share, and 4,000 shares of 10% cumulative
shares.
On October 1, 2018, Tonge sold and issued an additional 16,000 shares of common stock at $33. At
December 31, 2018, there were 20,000 incentive stock options outstanding, issued in 2017, and exercisable after
one year for 20,000 shares of common stock at an exercise price of $30. The market price of the common stock
at year-end was $48. During the year, the price of the common shares had averaged $40.
Net income was $650,000. The tax rate for the year was 40%.
Required:
Compute basic and diluted EPS for the year ended December 31, 2018.
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