Arquandt Company's net income last year was $550,000.The company had 150,000 common shares and 50,000 preferred shares outstanding.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 $1.20 per common share and $1.70 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 dividend paid to each type of share:
Total dividend for common shares = $1.20 x 150,000 = $180,000
Total dividend for preferred shares = $1.70 x 50,000 = $85,000

Next, we need to calculate the net income available to common shareholders:
Net income - Preferred dividends = $550,000 - $85,000 = $465,000

Finally, we can calculate earnings per share for common shares:
EPS = Net income available to common shareholders / Number of common shares
EPS = $465,000 / 150,000
EPS = $3.10

Therefore, the answer is B.

Arquandt Company's Net Income Last Year Was $550,000