ACC 615 Review Problem 3) - Basic & Diluted EPS The partial balance sheet of NG Co. reflected the following at 2025 year end: $450,000 Bonds Payable-$500,000 Par Value, 7%, Maturing December 31, 2034 Preferred Shares-$2, No Par Value, Cumulative, Convertible at 1 Preferred Sh. For 2 Common Sh. - 14,000 Sh. Outstanding Contributed Capital-Common Sh. Options Outstanding Common Stock Conversion Rights-7% Bonds Common Sh.-No Par Value, 320,000 Sh. Outstanding 210,000 70,000 30,000 800,000 Additional Information: 1) There are no dividends in arrears at the beginning of the year. No dividends have been declared for 2025. 2) Net income for 2025 is $1,263,000, includes $38,000 interest expense for the 7% bonds. 3) Income tax rate is 40%. 4) Bonds, options, and preferred shares were outstanding for the entire year. 5) The stock options are noncompensatory and are convertible into a total of 80,000 common shares at an exercise price of $32.30. The average share price during the year was $34. 6) No other common share transactions occurred during the year. 7) Each $1.000 bond is convertible into 30 shares of common stock. Required: 1) 2) Calculate basic and diluted EPS for the year ended December 31, 2025. Assume that one-half of the stock options were exercised on January 1, 2025. Prepare the journal entry to record the exercise of the stock options