Padowski Corporation's net income for the current year is $500,000.At year end,the corporation had outstanding 4,500 shares of 15%,$100 par value nonconvertible preferred stock and 15,000 shares of $10 par value common stock.No shares were issued or retired during the year.What is basic earnings per share?
A)$22.18
B)$25.64
C)$28.83
D)$33.33

Question

Quizplus · Accepted Answer

To calculate basic earnings per share (EPS), subtract preferred dividends from net income and divide by the number of common shares. Preferred dividends = 4,500 shares * $100 * 15% = $67,500. Net income available to common shareholders = $500,000 - $67,500 = $432,500. Basic EPS = $432,500 / 15,000 shares = $28.83.

Padowski Corporation's Net Income for the Current Year Is $500,000