On January 1, 2023, Myco Corporation had the following securities outstanding:
$1,000,000, 5% cumulative convertible preferred shares, $50 par; each share is convertible into 2 shares of common stock.
7% convertible bonds, $2,000,000 face value issued at par ($1,000) per bond. Each bond is convertible into 30 shares of common stock.
$6,000,000 common stock, $10 par value
Additional information:
a. On April 1, 2023, Myco purchased 100,000 shares of its common stock as treasury stock.
b. On June 30, 2023, Myco issued a 4% stock dividend
c. On October 31, 2023, 50,000 shares of treasury stock were sold.
d. As of 12/31/22 there were 40,000 incentive stock options outstanding. The stock options are exercisable in 2023 to purchase 40,000 common shares at an exercise price of $30.
e. The market price of the stock peaked on October 31, 2023 at $50, and on December 31, 2023 the market price of the stock closed at $30; the average market price of the stock during 2023 was $40.
f. Net income for the year ended December 31, 2023, was $1,500,000.
g. The income tax rate for 2023 was 40%.
Required:
1. In the space provided below, compute Myco's basic earnings per share for the year ended December 31, 2023.
2. On the next page compute Myco's diluted earnings per share for the year ended December 31, 2023.
Note: When computing basic and diluted EPS, use the same format reflected in the solutions to the Exercises and Problems assigned per the syllabus.
Reminder: You must show your calculations, i.e., how you arrived at each number. You will receive zero points for any response you do support with calculations. Providing the correct answer does not ensure that you will receive credit for your answer if you do not show your work (i.e., how you arrived at your answer).
Basic EPS (5 points)
