The Birch Corp. has the following items in its capital structure at 31 December 20X7, the end of the fiscal year:
a. Options to purchase 400,000 common shares were outstanding for the entire period. The exercise price is $17.50 per share. The average common share price during the period was $40.
b. Preferred shares, $2 annual dividend, cumulative, no-par, convertible into common shares at the rate of five shares of common for each preferred share. Seven thousand shares were outstanding for the whole year.
c. $3 million par value of 7% debentures, outstanding for the entire year. Debentures are convertible into five common shares for each $100 bond. Interest expense of $285,000 was recognized during the year.
d. Preferred shares, $5 annual dividend, cumulative, no-par, convertible into common shares at the rate of three shares of common for each one preferred share. Four thousand
shares were outstanding for the entire year. No dividends were declared in 20X7 on these shares.
e. $8 million par value of 5.5% debentures, outstanding for the entire year. Debentures are convertible into a total of 520,000 common shares. Interest expense of $660,000 was recognized during the year.

Required:
1. Calculate the individual effect for diluted EPS for each of the above items. The tax rate is 35%. For options, calculate shares issued and shares retired.
2. Assume Birch reported basic EPS from continuing operations items of $1.29 [($1,000,000 - $14,000 - $20,000) ÷ 750,000], discontinued operations gain of $1.00 ($750,000 ÷ 750,000) and EPS for net earnings of $2.29 [($1,750,000 - $14,000 - $20,000) ÷ 750,000]. Calculate diluted EPS, and show how it would be presented on the statement of comprehensive income.