P17-8 Isabelle Leclere is the controller at Camden Pharmaceutical Industries, a public company. She is currently pre- paring the calculation for basic and diluted earnings per share and the related disclosure for Camden's external financial statements. The following is selected financial information for the fiscal year ended June 30, 2017: CAMDEN PHARMACEUTICAL INDUSTRIES Selected Statement of Financial Position Information June 30, 2017 Long-term debt Notes payable, 10% 7% convertible bonds payable 10% bonds payable 1,000,000 5,000,000 6,000,000 Total long-term debt $12,000,000 Shareholders' equity Preferred shares, $4.25 cumulative, 100,000 shares authorized, $ 1 1,250,000 25,000 shares issued and outstanding Common shares, unlimited number of shares authorized, 1,000,000 shares issued and outstanding Contributed surplus-conversion rights Retained earnings 4,500,000 500,000 6,000,000 $12,250,000 Total shareholders' equity The following transactions have occurred at Camden 1. Options were granted by the company in 2015 to purchase 100,000 shares at S15 per share. Although no options were exercised during 2017, the average price per common share during fiscal year 2017 was $20 2. Each bond was issued at face value. The 7% convertible debenture will convert into common shares at 50 shares per $1,000 bond. It is exercisable after five years and was issued in 2016. Ignore any requirement to record the bonds' debt and equity components separately 3. The S4.25 preferred shares were issued in 2015. 3. The S4.25 preferred shares wer issued in 2015, 4. There are no preferred dividends in arrears, and preferred dividends were not declared in fiscal year 2017. 5. The 1 million common shares were outstanding for the entire 2017 fiscal year 6. Net income for fiscal year 2017 was $1.5 million, and the average income tax rate was 30%. Instructions (a) For the fiscal year ended June 30, 2017, calculate the following for Camden Pharmaceutical Industries 1. Basic earnings per share 2. Diluted earnings per share DIGGING DEEPER IGIGplain how premiums and discounts on outstanding convertible bonds affect the calculation of diluted earnings (b) Explain how premiums a per share