Burns Company reported $407.200 million in net income in 2016. On January 1, 2016, the company had 392 million shares of common stock outstanding. On March 1, 2016, 19.2 million new shares of common stock were sold for cash. On June 1, 2016, the company’s common stock split 2 for 1. On July 1, 2016, 3.2 million shares were reacquired as treasury stock.
Compute Burns’ basic earnings per share for the year ended December 31, 2016.
Net income was $341,600 for the year. Throughout the year the company had outstanding 28,000 shares of $2.00, $100 par value preferred stock and 119,000 shares of common stock.
Calculate basic earnings per share of common stock for the year.
Assume that the following data relate to Rosen, Inc. for the year 2015:
| Net income (30% tax rate) | $3,500,000 |
| Average common shares outstanding 2015 | 1,000,000 shares |
| 10% cumulative convertible preferred stock: Convertible into 80,000 shares of common | $1,600,000 |
| 8% convertible bonds; convertible into 75,000 shares of common | $2,500,000 |
| Stock options: Exercisable at the option price of $25 per share; average market price in 2015, $30 | 84,000 shares |
Compute the (a) basic earnings per share and (b) diluted earnings per share.
