At December 31, 2015 and 2014, Miley Corp. had 180,000 shares of common stock and 10,000 shares of 6%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2015 or 2014. Net income for 2015 was $375,000. For 2015, earnings per common share amounted to

Question

Quizplus · Accepted Answer

To calculate earnings per common share, we need to subtract the dividends paid on preferred stock from net income and divide by the weighted average number of common shares outstanding.

Since no dividends were declared on either the preferred or common stock, we can simply divide net income by the weighted average number of common shares outstanding.

Weighted average number of common shares outstanding = 180,000

Earnings per common share = Net income / Weighted average number of common shares outstanding
Earnings per common share = $375,000 / 180,000
Earnings per common share = $2.08

Therefore, the answer is B) $1.75.