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Ahnberg Corporation had 700,000 shares of common stock issued and outstanding at January 1. No common...

Ahnberg Corporation had 700,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1, Ahnberg issued 320,000 shares of convertible preferred stock. The preferred shares are convertible into 640,000 shares of common stock. During the year Ahnberg paid $192,000 cash dividends on the preferred stock. Net income was $2,362,000. What were Ahnberg's basic and diluted earnings per share for the year? (Round your answers to 2 decimal places.)

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Answer #1

Basic earning per share = (Net income-Preferred dividend)/Weighted average shares

                                    = (2362000-192000)/700000

Basic earning per share = 3.10 per share

Diluted earning per share = Adjusted Net income/Adjusted Shares

                                     = 2362000/1340000

Diluted earning per share = 1.76 per share

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