Lerner Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $500,000 of 10% convertible bonds outstanding during 2015. The preferred stock is convertible into 27,500 shares of common stock. During 2015, Lerner paid dividends of $.45 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2015 was $280,000 and the income tax rate was 30%.

Basic earnings per share for 2015 is (rounded to the nearest penny)

a. $1.35.

b. $1.30.

c. $1.25.

d. $1.20.

Diluted earnings per share for 2015 is (rounded to the nearest penny)

a. $1.24.

b. $1.26.

c. $1.28.

d. $1.33.