It is December $20$X$1.$ On May $1,20$X$1,$ the $10\%$ debentures with a principal amount of $$400,000$ were converted into $12,000$ shares. What adjustments are required to the numerator and denominator in calculating the dilutive effect on the EPS if the company pays taxes at $30\%?$

Multiple Choice

On numerator add back interest of $$9,333$ and denominator add $4,000$ shares.

On numerator add back interest of $$40,000$ and denominator add $12,000$ shares.

On numerator add back interest of $$28,000$ and denominator add $6,000$ shares

On numerator add back interest of $$13,333$ and denominator add $12,000$ shares

Please provide an explanation of the correct answer