It is December 20X1. On May 1, 20X1, the 10% debentures with a principal amount of $400, 000 were converted into 12, 000 shares. What adjustments are required to the numerator and denominator in calculating the dilutive effect on the EPS if the company pays taxes at 30%?

Multiple Choice

• On numerator add back interest of $28, 000 and denominator add 6, 000 shares

• On numerator add back interest of $9, 333 and denominator add 4, 000 shares.

• On numerator add back interest of $13, 333 and denominator add 12, 000 shares

• On numerator add back interest of $40, 000 and denominator add 12, 000 shares.