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The Pharoah Corporation issued 10-year, $4,310,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with

The Pharoah Corporation issued 10-year, $4,310,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 13:1, and in 2 years it will increase to 19:1. At the date of issue, the bonds were sold at 98. Bond discount is amortized on a straight-line basis. Pharoahs effective tax was 35%. Net income in 2017 was $7,900,000, and the company had 2,120,000 shares outstanding during the entire year. (a) Compute both basic and diluted earnings per share

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