A corporation reports net income of $150,000 for 2010. The corporation had 10,000 shares of cumulative, 10% $50 preferred stock and 75,000 shares of $10 par common stock for all of 2010. What is earnings per share?

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), first calculate the preferred dividends: 10,000 shares * $50 * 10% = $50,000. Subtract this from net income: $150,000 - $50,000 = $100,000. Then divide by the number of common shares: $100,000 / 75,000 = $1.33.

A Corporation Reports Net Income of $150,000 for 2010