On January 2, 2018, L Co

On January 2, 2018, L Co. issued at face value $20,000 of 4% bonds convertible in total into 1,000 shares of L's common stock. No bonds were converted during 2018. Throughout 2018, L had 1,000 shares of common stock outstanding. L's 2018 net income was $2,000. L's income tax rate is 50%.
No potential common shares other than the convertible bonds were outstanding during 2018.
L's diluted earnings per share for 2018 would be:

A) $1.00.
B) $1.20.
C) $1.40.
D) $2.00.

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