On June 30, 20X8, Lomond, Inc. issued twenty $10,000, 7% bonds at par. Each bond was convertible into 200 shares of common stock. On January 1, 20X9, 10,000 shares of common stock were outstanding. The bondholders converted all the bonds on July 1, 20X9. The following amounts were reported in Lomond's income statement for the year ended December 31, 20X9:
Revenues $977,000
Operating expenses $920,000
Interest on bonds $7,000
Income before income tax $50,000
Income tax at 30% $15,000
Net income $35,000
What is Lomond's 20X9 diluted earnings per share?
a. $2.50
b. $2.85
c. $2.92
d. $3.50
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