Problem - Presented below is information related to Alley Company.

1. Net Income [including an extraordinary gain (net of tax) of $130,000] $420,000

2. Capital Structure

a. Cumulative 8% preferred stock, $100 par,6,000 shares issued and outstanding $600,000

b. $10 par common stock, 84,000 shares outstanding on January 1. On April 1, 40,000 shares were issued for cash. On October 1, 16,000 shares were purchased and retired. $1,000,000

c. On January 2 of the current year, Alley purchased Raye Corporation. One of the terms of the purchase was that if Alley's net income for the following year is $400,000 or more, 50,000 additional shares would be issued to Raye stockholders next year.

3. Other Information

a. Average market price per share of common stock during entire year $30

b. Income tax rate 30%

Instructions - Compute BOTH diluted and undiluted earnings per share for the current year.