Arget Company's net income last year was $600,000.The company had 150,000 common shares and 60,000 preferred shares.There was no change in the number of common or preferred shares outstanding during the year.The company declared and paid dividends last year of $1.10 per common share and $0.60 per preferred share.The earnings per common share was closest to which of the following?

Question

Quizplus · Accepted Answer

First, we need to calculate the total dividends paid for preferred shares:

60,000 preferred shares x $0.60 = $36,000

Subtracting the total dividends from the net income gives us the earnings available for common shares:

$600,000 - $36,000 = $564,000

Then, we divide the earnings available for common shares by the number of common shares outstanding:

$564,000 ÷ 150,000 = $3.76

Therefore, the earnings per common share is closest to $3.76.

Arget Company's Net Income Last Year Was $600,000