131 Basic and diluted earrings per share The following data are presented by ABC Corp. for calendar 2020 Net income $ 5,500,000 Common shares outstanding, 1,000,000 shares 12%, cumulative preferred shares convertible into 120 000 common shares $1,600,000 10% convertible bonds, convertible into 105,000 common shares $ 7.500,000 420.000 call options exercisable at $ 25 per share Additional information 1 The common and preferred shares and the convertible bonds were outstanding from the beginning of the year 2 In 2020, a S 500.000 dividend was declared and distributed, however, no dividends were declared in 2019 3 The average market price of the common shares in 2020 was $ 30 The stock price was $ 27 on January 1, 2020, and S 35 on December 31, 2020 4. The convertible bonds were sold at par 5 The income tax rate for 2020 is 30% Instructions a) Calculate basic EPS. b) Calculate diluted EPS For the toolbar, preos ALT-E10 PC or ALT ENE10 (Mac)