Problem 2 (20 points): The Marmack Company had the following capital stock items in its stockholders equity on 12/31/16: 12% cumulative preferred stock, $25 par, 1 ,200,000 shares authorized, 700,000 shares issued $17,500,000 Common stock, $10 par, 8,000,000 shares authorized, 2,000,000 shares issued 20,000,000 Each preferred stock is convertible into one share of common stock. The conversion rate is to be automatically adjusted for stock splits and stock dividends. Marmack also has $3,000,000 of 9% bonds that were issued at par in 2015 and mature in 2025, Each $1,000 bond is convertible into 12 shares of common stock. The conversion rate is not adjustable for stock diidends or splits. The following transactions occurred in 2017: 1, A 5% common stock dividend that had been declared in December 2016 was issued on 1/1/17 2. On 1/1/17, Marmack offered ten key employees a stock option plan, offering them each the right to purchase 15,000 shares of Marmack common stock at a price of $20? The market price of the common stock on the date of grant was $20, and the fair value of each option is $2. The options may be exercised any time after 1/1/17, and the service period is two years. The stock price at the end of the year was $25; average stock price for the year was $22.50. 3. 400,000 shares of preferred stock were coverted into common stock on 5/1/17, Marmack issued common stock and retired the preferred stock. 4. On 6/1/17, the board authorized a 2-for-1 common stock split for 7/1/17 5. In lieu of a cash payment, 300,000 shares of common stock were issued to acquire a building on 8/1/17, when the market price of the stock was $23. 6. On 11/1/17, 240,000 shares of common stock were repurchased on the open market at $9 per share. 7. Preferred stock diidends were paid quarterly, on the last day of each quarter. Common stock dividends were declared on April 15 ($.30 per share) and on October 15 ($.20 per share) to shareholders of record on April 25 and October 25, to be paid on May 15 and November 15. Net income for 2017 was $11?550,000. Marmack is subject to a 40% income tax rate. Required: a) Prepare all joumal entries required in 2017 as a result of the transactions listed above. b) Compute Marmacks basic and diluted EPS for the year ended 12/31/17