ABC has 20,000 common shares outstanding throughout the year.It also had 20,000, 6 percent preferred shares, par $20, (cumulative and nonconvertible)outstanding throughout the year.Net income was $300,000.The earnings per share amount would be: (Rounded to the nearest cent.)

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), subtract preferred dividends from net income and divide by the number of common shares. Preferred dividends = 20,000 shares * $20 * 6% = $24,000. Net income = $300,000. EPS = ($300,000 - $24,000) / 20,000 = $13.80.

ABC Has 20,000 Common Shares Outstanding Throughout the Year