Blossom Inc. has 1.10 million common shares outstanding as at January 1, 2020. On June 30, 2020, 4% convertible bonds were converted into 105,000 additional shares. Up to that point, the bonds had paid interest of $545,000 after tax. Net income for the year was $1,299,218. During the year, the company issued the following:

1.		June 30:		12,250 call options giving holders the right to purchase shares of the company for $30
2.		Sept. 30:		17,250 put options allowing holders to sell shares of the company for $25

On February 1, Blossom also purchased in the open market 12,250 call options on its own shares, allowing it to purchase its own shares for $27. Assume the average market price for the shares during the year was $35. Assume further the following:

1.		On September 30, 210,000 convertible preferred shares were redeemed. If they had been converted, these shares would have resulted in an additional 105,000 common shares being issued. The shares carried a dividend rate of $3 per share to be paid on September 30. No conversions have ever occurred.
2.		There are 10,900 of $1,000, 5% convertible bonds outstanding with a conversion rate of three common shares for each bond starting January 1, 2021. Beginning January 1, 2024, the conversion rate is six common shares for each bond; and beginning January 1, 2028, it is nine common shares for each bond. The tax rate is 30%.

Calculate weighted common shares outstanding.

Weighted common shares outstanding

_______________

Calculate the income effect of the dividends on preferred shares.

Dividends on preferred shares

$ _____________

Calculate the basic earnings per share under IFRS. For simplicity, ignore the impact that would result from the convertible debt being a hybrid security. (Round answer to 2 decimal places, e.g. 15.25.)

Basic EPS

$ ___________

Determine an incremental per share effect for $3 preferred shares.

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
$3 Preferred shares		$				$

Calculate the after-tax interest paid on the 5% bonds.

After-tax interest on bonds converted

$

Determine an incremental per share effect for 5% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
5% Bonds		$				$

Calculate pro-rated incremental shares from assumed exercise of 12,250 options.

Pro-rated incremental shares