The Heath Corporation reported net income for 2018 of $177,500. Heath began the year with 100,000 shares of $5 par value common shares outstanding and 2,500 shares of $100 par value 8% preferred shares outstanding. On October 1, Heath sold 10,000 shares of common stock for $6 per share. Heath paid dividends to the common shareholders in December. If each share of preferred stock is convertible into 8 shares of common stock, the diluted earnings per share for 2018 is (rounded):
A. $1.45 per share.
B. $1.73 per share.
C. $1.29 per share.
D. $1.54 per share.
Answer: A
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