Dynamic Standards Inc. reported the following information as part of the capital structure of the entity as at January 1, 2022.

Liabilities:

Bond Issue: $6,000,000 issued at par when the market rate of interest was 6.0%. Bonds pay interest semi-annually. Each $1,000 bond is convertible into 10 common shares. The maturity date for this issue is June 1, 2029.

Shareholders Equity:

Common Shares, no par, voting, authorized: unlimited, 3,600,000 shares issued and outstanding $2,000,000

$3 Series A Preferred Shares, 600,000 issued and outstanding,

non-cumulative 3,000,000

$8 Series B Preferred Shares, 400,000 issued and outstanding, cumulative, convertible, on the basis of 6 common shares for each preferred share 6,000,000

Other Information:

March 31, 2022 Issued 64,000 shares at $12.75

June 30, 2022 One-half of the bonds were converted into common shares

October 31, 2022 Issued 36,000 common shares in exchange for a new truck

No preferred share dividends have been declared in 2022. The Series B share dividends are in arrears for 3 years.

Net Income for 2019 was $6,000,000

There are 75,000 stock options outstanding that will expire on June 15, 2024. These options carry an exercise price of $6.50.

The average market price for the common shares for 2022 was $9.00

Dynamic Standards has a tax rate of 40%

REQUIRED

1. Computed basic earnings per share

2. Compute diluted earnings per share assuming the basic earnings per share was 1.7123 (earnings = $3,125,000 and weighted average shares outstanding were 1,825,000.