On June 1, 2015, Sheffield Company and Tamarisk Company merged to form Vaughn Inc. A total of 764,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2017, the company issued an additional 579,000 shares of stock for cash. All 1,343,000 shares were outstanding on December 31, 2017. Vaughn Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2017. Each $1,000 bond converts to 40 shares of common at any interest date. None of the bonds have been converted to date. Vaughn Inc. is preparing its annual report for the fiscal year ending December 31, 2017. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,408,000. (The tax rate is 40%.) Determine the following for 2017

(a.) Diluted earnings per share -

The earnings figures to be used for calculating:

(b.) diluted earnings per share -