Matthews Company had five convertible securities outstanding during all of 2007. It paid the appropriate interest (and amortized any related premium or discount using the straight-line method) and dividends on each security during 2007. Each convertible security is described in the following table. The corporate income tax rate is 30%.

Security Description

9.5% preferred stock $200,000 par value. Issued at 112. Each $100 par preferred stock is convertible into 4.2 shares of common stock.

11.0% bonds $220,000 face value. Issued at par. Each $1,000 bond is convertible into 44 shares of common stock.

8.0% preferred stock $150,000 par value. Issued at par. Each $100 par preferred stock is convertible into 3.8 shares of common stock.

10.0% bonds $100,000 face value. Issued at 94. Discount being amortized over 20-year life. Each $1,000 bond is convertible into 55 shares of common stock.

9.0% bonds $200,000 face value. Issued at 108. Premium being amortized over 25-year life. Each $1,000 bond is convertible into 48 shares of common stock.

Required

1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share.

2. Prepare a ranking of the order in which the securities would be included in the diluted earnings per share computations.