A corporation has 2000 shares, 10% preferred stock of $65.00 par preferred stock, and 6000 shares of common stock outstanding. The net income for the year is $290,000. Calculate earnings per share. (Round your answer to the nearest cent.)

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Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by subtracting preferred dividends from net income and then dividing by the number of common shares outstanding. Preferred dividends = 2000 shares * $65 * 10% = $13,000. Net income available for common stock = $290,000 - $13,000 = $277,000. EPS = $277,000 / 6000 shares = $46.17.

A Corporation Has 2000 Shares, 10% Preferred Stock of $65