I need help computing this problem.

Assume that the following data relative to Metro Co. for 2001 is available:
Net Incom (30% tax rate): $3,200,000
Transactions in common shares
1/1 Beginning number 1,000,000 shares
3/1 Purchase of treasury shares (60,000)
6/1 Stock split, 2 for 1
11/1 Issuance of shares 120,000
9% cumulative convertible preferred stock
Sold (in 2000) at par, convertible into 200,000 shares of common stock $1,000,000
Stock Options
Exercisable at the option price of $25 per share
Average market price in 2001 is $30 60,000 shares
Compute the basic and diluted earnings per share for 2001

This has been a popular subject lately. I hope you will look at similar questions. By definition, EPS is earnings divided by shares. Basic EPS uses the shares actually issued - i.e. current shares. Diluted EPS uses the shares that could potentially be issued if you count current shares, plus stock options, warrants, convertibles, and other potential sources of dilution that were currently exercisable were invoked. Diluted shares will always be a larger number than current shares, or equal if none of these things exists.

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If you want to attempt it, we will check your answer. The shares actually issued are in your "Transactions in common shares section". The potential shares are listed below that.