Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock

Jones Corporation's capital structure follows.

December $31$Outstanding shares of stockCommon stock, outstanding shares$110,000$Convertible preferred stock, outstanding shares$10,0008\%$ Convertible bonds$$1,000,000$

During the year, the company declared and paid dividends of $$3$ per share on its preferred stock. The preferred shares are convertible into $20,000$ shares of common stock. The $8\%$ bonds are convertible into $30,000$ shares of common stock. Net income for the year is $$850,000.$ The income tax rate is $25\%.$

Required

a$.$ Compute basic EPS.

b$.$ Compute diluted EPS.