Select information for Gail’s Play School Corp. (GPSC) follows: 

■ GPSC earned net income of $9,000,000 for the year ended December 31, 2021. 

■ GPSC was subject to a 40% tax rate. 

■ GPSC had 5,000,000 ordinary shares outstanding during the entire year; their average market price was $15. 

■ GPSC had $1,000,000 in 4% cumulative preferred shares outstanding during the entire year. At the option of the holder, each $100 share is convertible into four ordinary shares anytime after December 31, 2024. 

■ GPSC did not declare dividends in 2021, but paid out $400,000 in dividends declared in 2020. 

■ GPSC had series A stock options outstanding the entire year that allowed employees to buy 20,000 ordinary shares for $16 each until December 31, 2023, and for $14 each from January 1, 2024, until December 31, 2025. 

■ GPSC had series B stock options outstanding the entire year that allowed employees to buy 5,000 ordinary shares for $13 each until December 31, 2023. 

■ GPSC had $3,000,000 in 5% bonds maturing on December 31, 2026, that were outstanding the entire year. Each $1,000 bond is convertible into 16 ordinary shares anytime before expiry. 

■ Assume that the effective rate of interest on the bonds equals the coupon rate. 

Required: 

a. Calculate GPSC’s basic EPS for the year ended December 31, 2021. 

b. Prepare a schedule that sets out the income effect, share effect, and incremental EPS for each security that is convertible into ordinary shares. Rank the potential ordinary shares by their dilutiveness. 

c. Calculate GPSC’s diluted EPS for the year ended December 31, 2021.