Belle Corporation began operations on January 1, 2019. The company reported the

following information on its balance sheet as of December 31, 2019:

Liabilities

Convertible bonds payable, $5,000,000, 5%, matures on Dec 31, 2024

$4,789,382

(see Note 1 below)

Equity

Common shares (unlimited authorized, 6,000,000 issued and outstanding)

$12,000,000

Class A Preferred shares, cumulative $8 annual dividend, convertible

to common shares at 4 common shares for each preferred share

(100,000 authorized, 20,000 issued and outstanding)

2,000,000

Class B Preferred shares, non-cumulative $16 annual dividend, convertible

to common shares at 2 common shares for each preferred share

(1,000,000 authorized, 25,000 issued and outstanding)

500,000

Contributed surplus, common stock warrants for the purchase of

300,000

common shares for $12 per share at any date before Dec 31, 2026

100,000

Contributed surplus, bond conversion rights (see Note 1 below)

345,866

Note 1: On January 1, 2019, the company issued $5,000,000 convertible 5% six year

bonds. Interest is paid on December 31 each year. Each $1,000 bond can be

converted into 50 common shares. Total proceeds of the issuance were $5,100,000.

If the company had issued the same bonds without the conversion rights, it would

have collected proceeds of $4,754,134 to yield 6%. The company uses the

incremental method to account for the issuance and the effective interest method

to amortize the bond.

Note 2: $160,000 in Class A preferred dividends were in arrears as of December 31, 2019.

The following transactions occurred in 2020:

On March 31, the company repurchased 500,000 common shares for $10 per

share.

On May 1, the company issued 1,000,000 employee stock options. Each stock

option allows for the purchase of one common share for $5 per share at any

date between May 1, 2020 and April 30, 2024. The common shares were

trading at $6 per share on May 1.

On December 15, the company declared $100,000 in Class A preferred

dividends and $175,000 in Class B preferred dividends. $275,000 in total

dividends were paid on December 31.

Net income for the year amounted to $12,000,000. The company pays

income tax at a rate of 30%. The average common share price was $8 during

the year

Required:

1) Prepare a schedule of the weighted average common shares outstanding for 2020

2) Calculate basic earnings per share for 2020

3)

Identify all potentially dilutive securities and present their related incremental

EPS

4)

Calculate the diluted earnings per share for 2020 Indicate any anti-dilutive

securities.