A corporation has 2,000 shares, 10% preferred stock of $50 par, and 6,000 shares of common stock outstanding. The net income for the year is $250,000. Calculate earnings per share.
A)$50
B)$40
C)$42
D)$125

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), first calculate the preferred dividends: 2,000 shares * $50 par * 10% = $10,000. Subtract this from the net income: $250,000 - $10,000 = $240,000. Divide by the number of common shares: $240,000 / 6,000 = $40.

A Corporation Has 2,000 Shares, 10% Preferred Stock of $50