Brandy Dudas Maternity Wear Ltd. (BDM) had 100,000 ordinary shares outstanding during all of 2019. In 2017, BDM issued $500,000, 3% non-cumulative preferred shares. Each $100 preferred share is convertible into one ordinary share. BDM also had 6,000, $100 cumulative preferred shares outstanding that are each entitled to an annual dividend of $1.60. Each preferred share is convertible into two ordinary shares. 

BDM’s net income for the year ended December 31, 2019, was $400,000. Its income tax rate was 20%. The annual dividend was declared and paid during 2019 on the cumulative preferred shares but not on the non-cumulative shares.

Required: 

a. Calculate BDM’s basic EPS for 2019. 

b. Are the non-cumulative convertible preferred shares dilutive or antidilutive in nature? The cumulative convertible preferred shares? 

c. Calculate BDM’s diluted EPS for 2019.