Problem 6-4 (LO 2) Consolidated EPS.

On January 1, 2016, Peanut Corporation acquires an 80% interest in Sunny Corporation. Information regarding the income and equity structure of the two companies as of the year ended December 31, 2018, is as follows:

	Peanut Corporation	Sunny Corporation
Internally generated net income	$55,000	$56,000
Common shares outstanding during the year	20,000	12,000
Warrants to acquire Peanut stock, outstanding during the year	2,000	1,000
5% convertible (into Sunnys shares), $100 par preferred shares, outstanding during the year		800
Nonconvertible preferred shares outstanding	1,000

Additional information is as follows:

a. The warrants to acquire Peanut stock are issued in 2017. Each warrant can be exchanged for one share of Peanut common stock at an exercise price of $12 per share.

b. Each share of convertible preferred stock can be converted into two shares of Sunny common stock. The preferred stock pays an annual dividend totaling $4,000. Peanut owns 60% of the convertible preferred stock.

c. The nonconvertible preferred stock is issued on July 1, 2018, and pays a 6-month dividend totaling $500.

d. Relevant market prices per share of Peanut common stock during 2018 are as follows:

Average
First quarter	$10
Second quarter	12
Third quarter	13
Fourth quarter	16

Required

Compute the basic and diluted consolidated EPS for the year ended December 31, 2018. Use quarterly share averaging.