Wildcat Corporation reported net income for the current year of $700,000. Wildcat had 5,000 shares of $100 par value, 10% preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding for the entire year. Earnings per share was:
A) $17.50
B) $18.75
C) $16.25
D) $16.67

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), subtract preferred dividends from net income and divide by the number of common shares. Preferred dividends = 5,000 shares * $100 * 10% = $50,000. EPS = ($700,000 - $50,000) / 40,000 = $16.25.

Wildcat Corporation Reported Net Income for the Current Year of $700,000