ACCT 5110 V1 Summer 2020 Question 6 (13 marks) Polygon Corporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020, was $200,000 and there were 30,000 common shares outstanding during the entire year. Polygon has the following two convertible securities outstanding: 10% convertible bonds (each $1,000 bond is convertible into 25 $50,000 common shares) 5% convertible $100 par value preferred shares (each share is $25,000 convertible into two common shares) Both convertible securities were issued at face value in 2017. There were no conversions during 2020 and Polygon's income tax rate is 20%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Required: (a) Calculate Polygon's basic earnings per share for 2020. Round to two decimal places (1.5 marks). (b) Calculate Polygon's diluted earnings per share for 2020. Round to two decimal places. Follow the three-step process to arrive at your answers and show your work for all steps. Indicate whether each security is dilutive or anti-dilutive and rank from most dilutive to least dilutive (8.5 marks). (c) Following the same steps from part (b), calculate Polygon's diluted earnings per share for 2020, assuming instead that the preferred shares pay a 15% dividend. Round to two decimal places (3 marks). Show all calculations for full marks. of hp