Didde Co. had 300,000 shares of common stock issued and outstanding at December 31, 2014. No common stock was issued during 2015. On January 1, 2015, Didde issued 200,000 shares of nonconvertible preferred stock. During 2015, Didde declared and paid $75,000 cash dividends on the common stock and $60,000 on the preferred stock. Net income for the year ended December 31, 2015 was $465,000. What should be Didde's 2015 earnings per common share?

Question

Quizplus · Accepted Answer

Earnings per common share is calculated by subtracting preferred dividends from net income and then dividing by the number of common shares outstanding. Here, ($465,000 - $60,000) / 300,000 = $1.35.

Didde Co Had 300,000 Shares of Common Stock Issued and Outstanding