CullumberCorporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020 was $392,000and there were59,900common shares outstanding during the entire year.Cullumberhas the following two convertible securities outstanding:

10% convertible bonds (each $1,000bond is convertible into20common shares)$111,0003% convertible $100par value preferred shares (each share is convertible into2common shares)$53,000

Both convertible securities were issued at face value in 2017. There were no conversions during 2020, andCullumber's income tax rate is23%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately.

Calculate the income effect of the dividends on preferred shares.

Dividends on preferred shares

CalculateCullumber's basic earnings per share for 2020.(Round answer to 2 decimal places, e.g. 15.25.)

Basic earnings per share

Calculate the after-tax interest paid on the10% bonds.

After-tax interest

Determine an incremental per share effect for each potentially dilutive security.(Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive securityIncremental

Numerator Effect

Incremental

Denominator Effect

EPSBonds10%$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

eTextbook and Media

Determine an incremental per share effect for each potentially dilutive security.(Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive securityIncremental

Numerator Effect

Incremental

Denominator Effect

EPS3% Preferred shares

$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

eTextbook and Media

Rank the potentially dilutive securities from most dilutive to least dilutive.

Rank 1select an option

3% Preferred shares

10% Bonds

Rank 2select an option

3% Preferred shares

10% Bonds

eTextbook and Media

CalculateCullumber's diluted earnings per share for 2020.(Round earnings per share to 2 decimal places, e.g. 15.25.)

NumeratorDenominatorEPSBasic$

enter a dollar amount rounded to 2 decimal places

select an item

Bonds

Preferred shares

Sub Total

Bonds

Preferred shares

enter a dollar amount rounded to 2 decimal places

RecalculateCullumber's basic and diluted earnings per share for 2020, assuming instead that the preferred shares pay a15% dividend. Calculate the income effect of the dividends on preferred shares.

Dividends on preferred shares$

enter the Dividends on preferred shares in dollars

CalculateCullumber's basic earnings per share for 2020.(Round answer to 2 decimal places, e.g. 15.25.)

Basic earnings per share$

enter Basic earnings per share in dollars rounded to 2 decimal place

Determine an incremental per share effect for the15% preferred shares.(Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive securityIncremental

Numerator Effect

Incremental

Denominator Effect

EPS15% Preferred shares

The15% shares are

select an option

anti-dilutive

dilutive

CalculateCullumber's dilutive earnings per share for 2020.(Round answer to 2 decimal places, e.g. 15.25.)

Diluted earnings per share