At December 31, 2014, the shareholders' equity of ABC Inc.reported as outstanding: 100 common shares and 30 nonconvertible preferred shares.On July 1, 2015, ABC Inc.issued a 10 percent stock dividend on its common shares and paid a cash dividend of
$2.00 per share on its preferred (the full year's requirement).Income for the year ended December 31, 2015 was $1,170.The 2015 EPS, rounded to the nearest cent, for ABC Inc.should be $8.58.

Question

Quizplus · Accepted Answer

The calculation of EPS (Earnings Per Share) does not directly involve preferred dividends or stock dividends in the way described. EPS is calculated by taking the net income (earnings) available to common shareholders and dividing it by the weighted average number of common shares outstanding during the period. The issuance of a stock dividend increases the number of shares outstanding, which would typically decrease the EPS if the net income remains constant. However, without knowing the original number of shares outstanding before the stock dividend and the exact earnings attributable to common shareholders (after subtracting preferred dividends), the exact EPS cannot be determined from the information provided.

At December 31, 2014, the Shareholders' Equity of ABC Inc