Digistore,Inc. ,had 400,000 shares of $20 par common stock and 40,000 shares of $100 par,6% cumulative,convertible preferred stock outstanding for the entire year ended December 31,2014.Each share of the preferred stock is convertible into 5 shares of common stock.Digistore's net income for 2014 was $1,680,000.For the year ended December 31,2014,the diluted earnings per share is

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To calculate the diluted earnings per share (EPS), we first need to consider the effect of the convertible preferred stock on the common shares. The 40,000 shares of preferred stock are convertible into 5 shares of common stock each, resulting in an additional 200,000 common shares (40,000 * 5). This increases the total common shares to 600,000 (400,000 original + 200,000 from conversion). Next, we need to adjust the net income to account for the preferred dividends. The preferred stock is 6% cumulative on a $100 par value, which equals $6 per share annually. For 40,000 shares, this totals $240,000 (40,000 * $6) in preferred dividends. The net income available to common shareholders is then $1,680,000 (net income) - $240,000 (preferred dividends) = $1,440,000.Finally, the diluted EPS is calculated as the adjusted net income divided by the adjusted number of shares. Thus, diluted EPS = $1,440,000 / 600,000 = $2.40. However, this calculation seems to have been misunderstood in the context of the provided choices, indicating a mistake in my explanation based on the choices given. The correct approach should involve understanding the impact of conversion on EPS, but without the specific calculation details provided in the choices, the correct answer based on standard EPS calculation would be as described. However, given the options and the typical calculation method, there seems to be a discrepancy in the explanation. The correct approach to find the diluted EPS involves adjusting both the net income for preferred dividends and the share count for the conversion, but the answer provided in the options does not align with the standard calculation provided.