If net income is $25,000 and there were 18,000 common shares issued and outstanding the entire year,and 100 cumulative,nonconvertible,6% $100 par preferred shares outstanding the entire year,what is EPS if no dividends were declared during the year.There are two years' dividends in arrears on the preferred shares.(Rounded to the nearest cent)

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Quizplus · Accepted Answer

EPS is calculated as (Net Income - Preferred Dividends) / Average Outstanding Shares. Preferred dividends are $600 (6% of $100 par value for 100 shares). Thus, EPS = ($25,000 - $600) / 18,000 = $1.36.

If Net Income Is $25,000 and There Were 18,000 Common