Sunland Corporation had a net income for the current year ending December 31, 2021 of $1,235,500. Throughout 2021 the following items were outstanding:

		386,500 common shares
		19,500 Class A $3 cumulative preferred shares that were convertible to common shares at a rate of 1:1
		52,000 Class B $4 non-cumulative preferred shares that were convertible at a rate of one common share for every two preferred shares.
		$504,000, 8% bonds that were convertible to 14,000 common shares
		$297,000, 10% bonds convertible to 12,000 common shares

No dividends were declared or paid in 2021. Sunlands tax rate is 25%.

1.Calculate the income effect of the dividends on Class A preferred shares.

2.Calculate the income effect of the dividends on Class B preferred shares.

3.Calculate basic earnings per share. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately). (Round answer to 2 decimal places, e.g. 15.25.)

4.Calculate the after-tax interest paid on the 8% bonds.

5.Determine an incremental per share effect for 8% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
8% Bonds		$				$

6.Calculate the after-tax interest paid on the 10% bonds.

7.

Determine an incremental per share effect for 10% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
10% Bonds		$				$

8.Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
Class A preferred shares		$				$

9.Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
Class B Preferred shares		$				$

10.Rank the potentially dilutive securities from most dilutive to least dilutive.

8% bonds		Rank 1Rank 2Rank 3Rank 4Anti-dilutive
10% bonds		Rank 1Rank 2Rank 3Rank 4Anti-dilutive
Class A preferred shares		Rank 1Rank 2Rank 3Rank 4Anti-dilutive
Class B preferred shares		Rank 1Rank 2Rank 3Rank 4Anti-dilutive

11.Calculate diluted earnings per share. (Round calculations of EPS to 3 decimal places, e.g. $3.545 and provide final answer to 2 decimal places, e.g. 15.25.)

		Numerator		Denominator		EPS
Basic		$				$
Class A preferred sharesClass B preferred shares8% bonds10% bonds
Sub Total
Class A preferred sharesClass B preferred shares8% bonds10% bonds
Sub Total
Class A preferred sharesClass B preferred shares8% bonds10% bonds
		$				$

Diluted EPS

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