Basic Earnings per Share—Simple Capital Structure
At December 31,2008,Munter Corporation had 50,000 shares of common stock issued and outstanding, 30,000 of which had been issued and outstanding throughout the year and 20,000 of which had been issued on October 1, 2008. Income before income taxes for the year ended December 31, 2008, was $753,200. In 2008 and 2009, a dividend of $80,000 was paid on 80,000 shares of 10% cumulative preferred stock, $10 par. On April 1, 2009, there were 30,000 additional shares issued. Total income before income taxes for 2009 was $527,000, which included an extraordinary gain before income taxes of $37,000. Assuming a 30% tax rate, what is Munter’s basic earnings per common share for 2008 and for 2009, rounded to the nearest cent? Show computations in good form.