III. EARNINGS PER SHARE

The Marilyn Company had 20,000 shares of common stock outstanding beginning 2016. Marilyn issued 6,000 additional common shares at the beginning of April. They also had 2,500 shares of 6%, $100 par preferred stock that was issued in 2012 for $110 per share. Each share of preferred is convertible into five shares of common. The $5 per share common and the annual preferred dividends have been declared and paid for the current year. At the end of December 2016, Marilyn also had outstanding $300,000 in 8% ten- year convertible debentures that were sold at 90 in 2012. Each bond is convertible into fifteen shares of common, and any discounts or premiums are amortized using the straight-line method. In addition, Marilyn has outstanding at the end of the fiscal year options to purchase 5,000 shares of common stock at $10 per share. In 2016, the average price of the common stock was $25 and the ending price was $35. The company's 2016 net income is $100,000 and its tax rate is 40%. Compute basic and diluted EPS for Marilyn in 2016 according to GAAP.

Basic EPS Calculation:

Dilutive Effect of the Preferred Stock:

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Dilutive Effect of the Options:

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Dilutive Effect of the Convertible Bonds:

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Diluted EPS Calculation: (Show how each dilutive security affects the EPS ratio, step by step)