Assume me that the following data relative to Kane Company for 2018 is available: $2,100,000 Net Income (tax rate of 40%) Cumulative 700,000 640,000 1,280,000 1,400,000 Change Transactions in Common Shares Jan. 1, 2018, Beginning number Mar. 1, 2018, Purchase of treasury shares June 1, 2018, Stock split 2-1 Nov. 1, 2018, Issuance of shares (60,000) 640,000 120,000 8% Cumulative Convertible Preferred Stock Sold at par, convertible into 200.000 shares of common (adjusted for split). $1,000,000 Stock Options Exercisable market price in 2018, s30 (market price and option price adjusted for split). at the option price of $25 per share. Average 60,000 shares Convertible Bonds On March 1, 2018, issued 15 year, $600,000, 10%, bonds at par to yield 10%. Face value $1,000 per bond. Each bond can be converted into 90 shares of common stock. (adjusted for split). 1. In determining basic earnings per share, dividends on preferred stock should be a. b. c. d. disregarded. deducted from net income only if the preferred stock is convertible. deducted from net income only if the preferred stock is noncumulative. deducted from net income if the preferred stock is cumulative. 2. In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are a. weighted by the number of days outstanding. b. weighted by the number of months outstanding. c. considered outstanding at the beginning of the year d. disregarded