On December 31, 2020, Brisbane Company had 100,000 shares of common stock outstanding and 32,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Brisbane purchased 26,000 shares of common stock on the open market as treasury stock paying $42 per share. Brisbane sold 6,200 treasury shares on September 30, 2021, for $47 per share. Net income for 2021 was $182,905. Also outstanding during the year were fully vested incentive stock options giving key officers the option to buy 52,000 common shares at $42. The market price of the common shares averaged $52 during 2021. Required:
Compute Brisbane's basic and diluted earnings per share for 2021. (Round your answers to 2 decimal places.)

Answer and Explanation:

The computation of the basic and diluted earning per share is given below:

For Basic EPS

Given that

Income for 2016 = 182,905

Income after 7% dividend on cumulatie peference share is

= 182,905 - ( 7% × 1,600,000)

= $ 70,905

And,  

Outstanding shares is

= 100,000 - (26,000 × 10 ÷ 12) + ( 6,200 × 3 ÷12 )

= 79,884

So,  

Basic earning per share is

= $70,905 ÷ 79,884

= $0.89 per share

For Diluted EPS

Outstanding shares is

= 79,884 + 10,000

= 89,884

So,

Diluted EPS is

= $70,905 ÷ 89,884

= $0.79 per share

Working note

Option to be exercised = 52,000 shares

So,

shares to be bought back with proceeds = (52,000 × 42) ÷ 52 = 42,000 shares

so difference should be of 10,000 shares

i'm pretty sure the answer is 60.