Farmers Corporation issued $4 million of 10-year, 7% callable convertible subordinated debentures on January 2, 2017. The debentures have a face value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in two years it will increase to 18:1. At the date of issue, the bonds were sold at 98 to yield an 8.2886% effective interest rate. Bond discount is amortized using the effective interest method. Farmers effective tax was 35%. Net income in 2017 was $7.5 million, and the company had 1 million shares outstanding during the entire year. For simplicity, ignore the requirement to record the debentures debt and equity components separately.

(a) Prepare a schedule to calculate both basic and diluted earnings per share for the year ended December 31, 2017.