The Sombrero Company began operations on January 1, 2018. As at December 31, 2019 the partial balance sheet of Sombrero Company reflected the following balances: Long-term bank loans: $ 800,000 Bonds payable — 10%, convertible par value $500,000, net of discount: $480,000 Preferred shares — $2 dividend, no-par value, cumulative, 100,000 shares authorized, 10,000 shares outstanding: $100,000 Preferred shares — $5 dividend, no-par value, non-cumulative, convertible, 500,000 shares authorized, 100,000 shares outstanding: $400,000 Conversion rights: $150,000 Common shares — no-par value; 1,000,000 authorized, 500,000 issued: $1,500,000 

Additional information 

1. Net income for 2019 was $950,000. 

2. No dividends were declared in 2018. 

3. Dividends in the amount of $600,000 were declared in 2019. 

4. Each $1,000 bond is convertible into 100 common shares. Interest expense on the bonds for the year was $22,000. 

5. The conversion rate on the preferred shares is one preferred to one common share. These preferred shares were issued on January 1, 2018. 

6. Options are outstanding to purchase 100,000 common shares at $5 per share. The options expire in 2 years. The average market price of the common shares for 2019 was $8 per share. 

7. The income tax rate is 40%. 

8. All items have been outstanding for the entire year, except for the convertible bonds that were issued July 1, 2019. 9. No common shares have been issued or retired during 2019. 

Required: 

a. Determine the dividend distributions for 2019. Show your work. 

b. Calculate the basic and diluted earnings per share (EPS) for 2019. Show your work.