AICPA Adapted Items 3 and 4 are based on the following information: Information relating to the capital structure of the Galaxy Company is as follows: December 31 20X8 20X9 Outstanding shares of: Common stock 90,000 90,000 Convertible preferred stock 10,000 10,000 9% convertible bonds $1,000,000 $1,000,000 During 20X9 Galaxy paid dividends of $2.50 per share on its preferred stock. The preferred stock is convertible into 20,000 shares of common stock and is dilutive. The 9% convertible bonds are convertible into 30,000 shares of common stock and are also considered dilutive. The net income for the year ended December 31, 20X9, is $485,000. Assume that the income tax rate is 50%. Show work 3. What should be the basic earnings per share, rounded to the nearest penny, for the year ended December 31, 20X9? a. $3.79 b. $4.21 BEPS: c. $4.41 d. $5.11 Show woak 4. What should be the diluted earnings per share, rounded to the nearest penny, for the year ended December 31, 20X9? a. $3.79 b. $3.96 DEPS c. $4.11 d. $5.11 5. A company's convertible debt is both a potential common stock and dilutive in determining earnings per share. What would be the effect of consideration of the convertible debt in calculating: Basic Dilutive Earnings per Share Earnings per Share Decrease Decrease b. Increase No effect No effect Decrease d. Decrease Increase c