On January 1, 2000 Bear Company acquired all of the common stock of Rabbit Company at book value Bear accounts for its investment in Rabbit using the initial value method and Rabbit does not pay dividends on its common stock.

The Balance sheets of Bear and Rabbit on December 31, 2020 is listed below:

			Bear		Rabbit
Common stock $1 par			1,000,000		20,000
preferred stock $10 par 4%					10,000
net income (unconsolidated)			90,000		45,000

a) Determine the consolidated earnings per share of Bear Company. Rabbit's preferred stock in non-convertible.

b) The preferred stock is convertible into 5 shares of common stock of Rabbit Company