Jackie Enterprises Ltd. has a tax rate of 30% and reported net income of $8.5 million in 2017. The following details are from Jackie's statement of financial position as at December 31, 2017, the end of its fiscal year:

Other information:
1. Quarterly dividends were declared on March 1, June 1, September 1, and December 1 for the preferred shares and paid 10 days after the date of declaration.
2. Dividends paid on common shares amounted to $980,000 during the year and were paid on December 20, 2017.
3. Interest expense on bonds payable totalled $1,178,200, including bond discount amortization, which is recorded using the effective interest amortization method.
4. There were no issuances of common shares during the 2017 fiscal year, and no conversions.
Instructions
(a) Determine the amount of interest expense incurred in 2017 for each of the bonds outstanding at December 31, 2017.
(b) Calculate basic earnings per share for 2017.
(c) Determine the potential for dilution for each security that is convertible into common shares.
(d) Calculate diluted earnings per share for 2017.
(e) What is the significance of the preferred share dividends being paid quarterly? What impact, if any, does this frequency in payment have on the calculation of diluted earnings per share?

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Long-term debt: Bonds payable due Dec. 31, 2023, 10% (issued at par) Bonds payable, face value $9,000,000, due Dec. 31, 2024, 7.25%, convertible $ 5,000,000 8,600,000 into common shares at the investor's option at the rate of two shares per $100 of bonds Shareholders' equity: Preferred shares, $4.50 cumulative, convertible into common shares at the rate of $5,500,000 two common shares for each preferred share, 120,000 shares outstanding Preferred shares, $3.00 cumulative, convertible into common shares at the rate of 10,000,000 one common share for each preferred share, 400,000 shares outstanding Common shares, 1,700,000 shares outstanding Contributed surplus-conversion rights for bonds Retained earnings 6,000,000 750,000 9,500,000