Sunland Corporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020, was $399,000 and there were 59,600 common shares outstanding during the entire year. Sunland has the following two convertible securities outstanding:

10% convertible bonds (each $1,000 bond is convertible into 20 common shares)		$100,000
3% convertible $100 par value preferred shares (each share is convertible into 2 common shares)		$54,000

Both convertible securities were issued at face value in 2017. Sunlands income tax rate is 24%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Assume that 40% of the convertible bonds were converted to common shares on April 1, 2020. The balances at December 31, 2020 do not reflect the conversion of April 1, 2020.

(a)

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Calculate Sunlands weighted average common shares outstanding. (For your calculation, round bond value and final answer to 0 decimal places, e.g. 5,250.)

Weighted average number of common shares

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(b1)

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Calculate the income effect of the dividends on preferred shares.

Dividends on preferred shares

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(b2)

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Calculate Sunlands basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.)

Basic earnings per share

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(c1)

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

After-tax interest on bonds converted

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(c2)

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