EPS with convertible Bonds and preference shares. On January 1, 2019 Land SA issued 10 year $3,000,000 face value 6% bonds at par (at 100). Lands net income in 2020 was $240,000 and its rate is 40%. Interest expense on the liability component in 2020 was $210,000. The company has 100,000 ordinary shares outstanding throughout 2019. None of the bonds were converted in 2019.

Required:

1. Compute diluted earnings per share in 2019.

2. Compute diluted earnings per share in 2019 assuming that instead of the bonds $1,000,000 of 5% convertible bonds were issued. Each $100 preference share is convertible into 5 ordinary shares of Land.