Novak Inc. had $509,000$ common shares outstanding for the entire fiscal year ended August $31,2023.$ Novak also had $110,000$ $$3$

cumulative, no$-$par value preferred shares outstanding for the full year. Options were written at the start of the fiscal year to purchase

$30,000$ common shares at $$17$ per share. The average market price of Novak's common shares during the year ended August $31,2023$

was $$25$ per share. The options expire in $2032,$ and none were actually exercised during the current year. Also outstanding for the

entire year was a $6\%$ bond with a face value of $$4,950,000,$ convertible to $112,500$ common shares. Novak Inc.$\text{'}$s net income for the

year was $$2,722,300,$ and the income tax rate for the fiscal year was $40\%.$

$($a$)$

Calculate the income effect of the dividends on the preferred shares.

Dividends on preferred shares $,$$