At December 31, 2016 and 2017, Danish Corp.had 100,000 common shares and 10,000, $5, no par value cumulative preferred shares outstanding.No dividends were declared in 2016 or 2017.Net income for 2017 was $400,000.For 2017, basic earnings per share would be

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Basic earnings per share (EPS) is calculated as (Net Income - Preferred Dividends) / Weighted Average Shares Outstanding. Since the preferred shares are cumulative, the dividends for both 2016 and 2017 must be subtracted from the net income, even if they were not declared. Preferred dividends = 10,000 shares * $5 = $50,000 per year. Total preferred dividends for 2016 and 2017 = $100,000. Therefore, EPS = ($400,000 - $100,000) / 100,000 = $3.00.