Explanation:

The basic EPS is calculated as: $\text{Basic EPS} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Weighted Average Number of Shares Outstanding}}$

Given the data:

• Net income: $210,000
• Preferred dividends: $0
• Weighted average shares calculation:
  • From 1 January to 1 April (3 months): 50,000 shares
  • From 1 April to 1 July (3 months): 30,000 shares (50,000 - 20,000 repurchased)
  • From 1 July to 31 December (6 months): 60,000 shares (30,000 × 2 due to the stock split)

Weighted average shares: $\left(50,000 \times \frac{3}{12}\right) + \left(30,000 \times \frac{3}{12}\right) + \left(60,000 \times \frac{6}{12}\right) = 12,500 + 7,500 + 30,000 = 50,000$

However, the stock split is applied retroactively to the beginning of the period, so the weighted average shares become: $\left(50,000 \times 2 \times \frac{3}{12}\right) + \left(30,000 \times 2 \times \frac{9}{12}\right) = 25,000 + 45,000 = 70,000$

Thus, basic EPS: $\frac{210,000}{70,000} = 3.00$

Why not B or C?

• B incorrectly uses the year-end shares without weighting or retroactive adjustment for the split.
• C fails to apply the stock split retroactively for the entire period.