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Blue Jays Ltd. reported Long-Term Liabilities and Shareholders' Equity in its December 31, 2021, balance sheet as follows: Long Term Liabilities: $2,200,000 Bonds Payable 6%
Blue Jays Ltd. reported Long-Term Liabilities and Shareholders' Equity in its December 31, 2021, balance sheet as follows: Long Term Liabilities: $2,200,000 Bonds Payable 6% interest, convertible to 40 common shares/$1,000 bond $5,500,000 Bonds Payable 9% interest, convertible to 40 common shares/$1,000 bond Shareholders Equity: $2,080,000 Class A Preferred Shares No par value, $3 dividend, cumulative, each preferred share convertible into 8 common shares, 260,000 authorized, issued, and outstanding $5,800,000 Class B Common Shares No-par, 2,900,000 authorized, issued, and outstanding All of the above reported bonds payable, preferred shares and common shares were outstanding throughout fiscal 2021. No transactions involving the bonds payable, preferred shares or common shares occurred during fiscal 2021, except for interest on the bonds payable. The bonds payable were all issued and sold at par. Preferred dividends had not been declared in fiscal 2020. Blue Jays Ltd. also had Class B common stock written call options to purchase 100,000 common shares at $6.00 per share outstanding throughout fiscal 2021. No options were exercised during fiscal 2021. The fair market value of Blue Jays Ltd.'s common shares was $10.00 per share throughout fiscal 2021. Blue Jays Ltd.'s income tax rate is 15%. The weighted average of common shares outstanding for 2021 was 2,900,000 common shares, and Blue Jays Ltd. earned net income of $5,000,000. 1) Calculate Blue Jays Ltd.'s fiscal 2021 basic earnings per share 2) Determine an incremental per share effect for 6% bonds 3) Determine an incremental per share effect for 9% bonds 4) Determine an incremental per share effect for Class A preferred shares 5) Calculate the incremental shares outstanding upon exercise of the options 6) Rank the potentially dilutive securities from parts 2) to 5) from most dilutive to least dilutive 7) Calculate Blue Jays Ltd.'s fiscal 2021 diluted earnings per share (round per share calculations to 3 decimals)
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