Pharoah Corporation had net income of $$36,000$ for the year ended December $31,2023,$ and weighted average number of common

shares outstanding of $10,000.$ The following information is provided regarding the capital structure:

$5\%$ convertible debt, $220$ bonds each convertible into $43$ common shares. The bonds were outstanding for the entire year.

The income tax rate is $30\%.$ The bonds were issued at par $($ $$1,110$ per bond$).$ No bonds were converted during the year.

$3\%$ convertible, cumulative $$100$ preferred shares, $1,000$ shares issued and outstanding. Each preferred share is convertible

into $2$ common shares. The preferred shares were issued at par and were outstanding the entire year. No shares were

converted during the year.

Your answer is correct.

Calculate the income effect of the dividends on preferred shares.

Dividends on preferred shares

Calculate the diluted earnings per share for $2023,$ using the if$-$converted method. For simplicity, ignore the requirement to record

the debt and equity components of the bonds separately. $($Round earnings per share to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

Basic

Bonds

Sub Total

Preferred shares $*{*}^{}$

Denominator

EPS

Numerator

$

$

$

$