HeadlandInc. had507,000common shares outstanding for the entire fiscal year ended August 31, 2020.Headlandhas102,000outstanding $2cumulative, no-par value preferred shares. All shares were outstanding for the full year. Options were written at the start of the fiscal year to purchase31,000common shares at $16per share. The average market price ofHeadland's common shares during the year ended August 31, 2020 was $25per share. The options expire in 2029, and none were actually exercised during the current year. Also outstanding for the entire year was a6% bond with a face value of $6,600,000, convertible to150,000common shares.HeadlandInc.'s net income for the year was $2,688,300, and the income tax rate for the fiscal year was40%. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately).

Calculate the income effect of the dividends on preferred shares.

a) Dividends on preferred shares$

b) CalculateHeadlandInc.'s basic earnings per share for the year ended August 31, 2020.(Round answer to 2 decimal places, e.g. 15.25.)

Basic EPS$

c) Calculate the after-tax interest paid on the6% bonds.

After-tax interest on bonds converted$

d) Determine an incremental per share effect for6% bonds.(Round earnings per share to 2 decimal places, e.g. 15.25.)

Incremental numerator effect Incremental dinominator effect EPS

6%k bonds. $........................... $.................................... $.............

e) Calculate the proceeds from assumed exercise of31,000options.

Proceeds from exercise of options

$

f) Calculate the incremental shares oustanding upon the exercise of options.

The incremental shares oustanding upon the exercise of options

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

6% bonds Rank 1Rank 2Anti-dilutiveOptions Rank 1Rank 2Anti-dilutive

h) CalculateHeadlandInc.'s diluted earnings per share for the year ended August 31, 2020.(Round calculations of EPS to 3 decimal places, e.g. $3.545 and provide final answer to 2 decimal places, e.g. 15.25.)

NumeratorDenominatorEPSBasic EPS$$ 6% bondsOptionsSub Total$ 6% bondsOptions$$

Diluted EPS