At December $31,2016,$ Falcon Ltd$.$ had the following items in shareholders' equity: Preferred shares, Class A$,$ nonvoting, cumulative, par $$10,$ $$2$ dividend per share, $100,000$ authorized, $50,000$ issued.

Preferred shares, Class B$,$ voting, cumulative, par $$15,$$$3$

$$500,000$ dividend per share, convertible at the rate of one preferred share to five common shares; $200,000$ authorized, $80,000$ issued

Common shares, voting; $1,000,000$ authorized, $600,000$ issued

Retained earnings $($deficit$).$

$[1,200,000],[5,357,000],[(2,394,000)],[4,663,000]$

At December $31,2016$ the following were disclosed in notes or other parts of the balance sheet:

There were two common share stock options outstanding:

$$15$ per share exercise price and $50,000$ shares, currently exercisable

$$17$ per share exercise price and $120,000$ shares, able to be exercised after January $1,2017$

During $2017,$ the following occurred:

Net income was $$1,100,000.$

$80,000$ common shares were issued on March $1,2017$ for $$23$ per share.

The tax rate was $40\%$

No dividends were declared or paid to any of the shareholders.

The average market price of Falcon's shares during $2017$ was $$20.$

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