Kantimo Corporation has 120,000 shares of common stock outstanding throughout the year.It also had 20,000 shares of $2 preferred stock, cumulative and non-participating, outstanding throughout the year.During the year, the company met all required dividend payments.If the company's net income were $95,000, what would be the earnings per share?

Question

Quizplus · Accepted Answer

First, calculate the dividends on preferred stock: 20,000 shares * $2 = $40,000. Subtract this from net income: $95,000 - $40,000 = $55,000 available for common shareholders. Divide by the number of common shares: $55,000 / 120,000 shares = $0.46 per share.

Kantimo Corporation Has 120,000 Shares of Common Stock Outstanding Throughout